Gold have enjoyed a resurgence in interest

Gold have enjoyed a resurgence in interest, after market sentiment was bolstered by reports over the weekend that the IMF was preparing a loan facility for Italy. Apparently, the IMF would make €500bn to €600bn available at an interest rate of between 4% and 5%. The IMF has already denied these reports. Nevertheless, the euro has strengthened on the news,
which has relieved much of the pressure that had been weighing down on gold last week.

Optimism over the Eurozone was further enhanced by speculation that headway had been made regarding the European Financial Stability Fund (EFSF). Apparently, EU finance ministers have reached an agreement on how to leverage the rescue fund, according to documents leaked to Reuters over the weekend. News out of the US is also contributing to the more upbeat mood on markets, with preliminary reports from retailers suggesting that it was a good Black Friday weekend. With a slew of US data flow out this week, this optimism over the outlook for US
economy is sure to be tested in the coming days.

ETF buying of gold continued this past week, 11.4 tonnes added. Momentum may appear be slowing (28.2 tonnes were added the previous week) but ETF holdings now stand at 2,430.1 tonnes, a new high for the year. The continued ETF support is encouraging, and underscores the growing confidence in the gold market. After three weeks of gains, ETF holdings in silver fell
this past week, losing a substantial 185.1 tonnes. Once again, it appears that ETFs remain cautious on silver, if not outright bearish.

Gold support is at $1,691 and $1,669. Resistance is $1,718 and $1,721.