Gold enjoyed good support yesterday as fears over the Eurozone debt situation kept investors in risk-off mode

Gold enjoyed good support yesterday as fears over the Eurozone debt situation kept investors in risk-off mode. Overnight though, trading was rather lacklustre with prices remaining relatively range bound.

This morning, activity has remained light with only a small amount of gold physical buying evident on dips below $1,785. Contributing to the general lack of direction is the relative absence of physical buying from the Middle East owing to holidays in observance of Eid. Our Standard Bank Gold Physical Flow Index is still in positive territory (indicating net buying) but continues to move lower. We expect physical demand to return in full force, in line with the usual seasonal pattern in early January next year.

Today, focus will be on Italian politics as parliament prepares for a budget vote. There is some concern that the Italian Prime Minister Berlusconi will be able to secure the required majority. Such a failure could result in Berlusconi facing a confidence vote, which could delay the necessary fiscal reforms and create even more uncertainty in terms of the Eurozone debt crisis.

Gold support is at $1,765 and $1,737. Resistance is $1,811 and $1,828