Compiled 11/20/09 6:00 AM (CT)

Statistics: London Gold Fix $1,142.50 +$7.50 LME Copper stks 421,875 tons +1,325 tons

GOLD MARKET FUNDAMENTALS: (6:00 AM CST) The gold market managed to close higher yesterday in spite of a strong dollar, and this was a rare development. While yesterday's World Gold Council report showed world gold demand falling 34% from a year ago, that was only half the story. Demand increased 10% from the 2nd quarter, which is the first quarterly increase in a year. Last year gold demand soared in the 3rd quarter with the onslaught of the financial crisis, so it is not shocking that this year's numbers came up short. If the stock market continues to sell off today, this could put some pressure on gold and other precious metals, but just like the case with the dollar, stock markets were under pressure yesterday and gold still managed to closed higher. Retail investors seem to be looking to protect wealth and gold demand is likely to increase even more if the dollar rally falters.

OUTSIDE MARKET DEVELOPMENTS: (6:00 AM CST) The US dollar gained overnight in the wake of steep declines in equity prices yesterday. Risk aversion is being credited with the dollar gains, as funds are apparently booking profits and putting them into "safe" instruments like US government bonds, which clearly could be only a temporary maneuver. The German PPI fell 7.6% from year ago levels in October, which was only slightly greater than expected, and the Bank of Japan held rates steady at the record low 0.1%, neither of which is a surprise. The long term view hasn't really changed, as the record amount of debt the US government is undertaking is fanning inflationary concerns. But if the economy sputters, inflation threats will tend to abate. Dissatisfied with President's lack of progress on getting China to strengthen its currency against the Dollar, two US Senators, one Republican and one Democrat, are asking the Commerce Department to look into possible "currency manipulation" on the part of the Chinese government. If this issue gains momentum, it could raise concerns about protectionism and potential threats to the global economic recovery.