OUTSIDE MARKET DEVELOPMENTS:

Asian equity markets were mixed to mostly lower overnight, but the Shanghai Index was down sharply, mostly due to declines in property developer shares following the Chinese Premier's comments on Wednesday that restrictions on the real estate market would remain. China's foreign direct investment (FDI) declined for the 4th straight month in February, down 0.9% from a year ago. This suggests to some traders that the PBoC may cut banks' reserve ratio to offset the decline. The Maoist head of the Chongqing Communist Party, Bo Xilai, has been removed from his position, which raises concern over possible backlash by his supporters in that region. European stocks were mostly higher, except for the FTSE index, which was down slightly. Ratings company Fitch lowered its outlook on the UK's AAA bond rating to negative. The dollar was down slightly overnight, and crude oil was up slightly. Traders are looking for Initial Jobless Claims to come in at 357,000 and PPI +0.5% this morning.
Outside markets are fairly quiet this morning after an active week, as it appears that the trade has gotten cautious ahead of the slate of economic reports this morning. The recent series of positive economic data has helped put pressure on the precious metals, as it has eased concerns over inflation and has boosted investor confidence. The moves have been built on strong data, and the trade might need more of that this morning to maintain it recent trend. Therefore, any disappointment on the jobs front or higher than expected PPI could spark some short covering in gold. Overnight the cash gold market seemed to find a little support from bargain hunting in Asia. Hints of a less-than-smooth succession process in China may lead to some safe haven support for gold, but for the most part the market appears to be biding time ahead of the today's reports. Comex Gold Stocks were 11.408 million ounces up 10,207. After three days of steep declines, April gold has gotten a bit oversold, and some recent shorts may be anxious to cover if this morning's scheduled data comes up short of expectations. Initial support for April gold comes in at $1,628.50 with resistance at $1,659.50.