Compiled 10/13/08 6:00 AM (CT)

Statistics: London Gold Fix $865.00 -$53.00 LME Copper stocks 209,325 tons -75 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) Certainly a high degree of flight to quality interest will remain in the marketplace following last week's hyper volatile situation in global equity markets. However, one might have expected a further setback in gold prices this morning in the wake of the sharp recovery in the stock market, but apparently the sharp slide in the gold market late last week, compensated or factored in some of the weekend developments. On the other hand, some gold traders suggest that the sharp anticipated slide in the Dollar in the wake of the weekend developments is responsible for the gold market attempting to hold slightly higher to unchanged into the US opening. It is also possible that a broad based physical commodity market bounce is providing the gold market with some spillover buying support. With the gold market last Friday forging an extremely violent two sided trading range that could temporarily discourage some traders in the bull camp. With the October 7th Commitment of Traders with Options report for Gold showing the Non-commercial position to be net long 110,408 contracts and the Non-reportable position net long 22,461 contracts, that left the "combined" spec and fund position net long 132,869 contracts as of early last week. However, at last week's highs, the December gold contract was as much as $54 an ounce above the level where the COT report data was compiled and that could have dramatically pumped up the spec long positioning into the Friday morning highs.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) One might have expected the gold market to come in under pressure today in the wake of a massive coordinated government intervention in the global banking system. Perhaps some players see the government moves as inflationary, but perhaps the metals trade is once again simply tracking the action in the US Dollar. Some traders are suggesting that the upside action in the gold market today is classic technical short covering action from the compacted selling effort seen at the very end of the last week. Other traders suggest that the coordinated efforts to quell the global banking crisis have reduced the threat of severe and ongoing deflation and perhaps the moves have also increased the odds of inflation. In almost every viewpoint in the marketplace there seems to be expectations of more violent two sided price action ahead. With a partial US Banking holiday today and the US stock markets showing significant strength, it is possible that some flight to quality longs in the gold market will be doubt their positions somewhat in the early going today.