By Nell Sloane While equity markets in Asia were generally weaker, stock markets in Europe have mover higher this morning. U.S. stock indices are slightly higher during the early Tuesday trade. The Dollar is weaker against the major currencies during overnight trading. China raised yields at today's central bank bill auction and published new rules to curb speculative capital inflows. This week's APEC meeting will consider a free trade area between member nations. The UK Foreign Trade Deficit during September was 8.22 billion Pounds, larger than forecasts. Major US economic indicators this morning include September Wholesale Trade at 9:00 AM, and several private surveys of store sales released during the morning. The second leg of the Treasury's monthly refunding, the 10-year note auction, will have the results announced at 12:00 PM. GOLD MARKET FUNDAMENTALS: (NYSE: GLD) With the Dollar lower this morning and the headlines full of quotes from various US Fed officials that seem to indicate conflict inside the US Fed, it is not surprising to see gold prices race to yet another new all time high. In fact, the gold market might have been supported by comments from Chinese officials, who expressed concerns over the inflationary ramifications of the Fed action last week. With the gold market fresh off talk of a possible return to the old gold standard at the start of the week and the talk of inflation clearly dominating the headlines again this morning, the gold bulls would seem to have both uncertainty and inflation themes in their court today. Sentiment overnight was apparently bullish enough that Indian gold prices ramped up to new all time highs, despite talk of sluggish demand in that market. While the gold market hasn't paid that much attention to physical supply and demand elements recently, the trade might see news overnight that Vietnam will allow gold imports as a fresh positive. Some traders think that the Dollar is going to be allowed to go even lower, despite spirited commentary ahead of the upcoming G20 meeting. In a potentially countervailing news item, Randgold showed a sharp increase in 4th quarter gold production, compared to the prior quarter's output. Comex Gold Stocks were 11.209 million ounces, down 27,323 ounces. Gold stocks have increased 14 of the last 20 days. One can't fight the trend but fresh longs are probably left with far out of the money bull call spreads, as one of the few reasonable ways to play this market under some control. We suspect that the market is set to dramatically extend the rally, but volatility could also be extremely high as the market deals with what appears to be historic conditions. We have some longer term cycle analysis that suggests gold might not peak until March of 2011 but at the current pace of gain, the market could periodically run out of fresh buying fuel. SILVER MARKET FUNDAMENTALS: (NYSE: SLV) With silver prices jetting higher and in the process returning to pricing not seen since the early 80's, it isn't surprising to see a bullish buzz surrounding the market this morning.

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