Eurozone debt crisis as talks between German and French leaders appeared to be moving along

Gold benefited from yesterday’s renewed optimism off the back of

1. Hopes that China would soon engage in monetary easing after the latest trade figures showed slowing foreign demand,
2. Allayed fears over the Eurozone debt crisis as talks between German and French leaders appeared to be moving along, and
3. Generally dovish sentiments expressed by Fed members addressing various forums despite the continued improvement in US data.

Momentum, however, failed to carry over into overnight trade, with Asian investors not expressing much interest in the higher prices. As European markets opened this morning, prices once again rallied, initially prompted by short-covering which appeared to make way for some fresh buying. However, this buying is dissipating as yesterday’s optimism is fading. Currently, European stocks are mostly trading in the red and US equity futures signal further losses later today. Consequently, we’ve already seen Gold come off quite sharply, with palladium the hardest hit.

Perhaps markets might take heart again from today’s scheduled Fed speakers or the release of the Fed’s Beige Book, but for now it seems as if Gold will continue to lose ground.

Gold support is at $1,617 and $1,597. Resistance is $1,650 and $1,661.