Gold are benefiting from a broadbased buying across asset classes

As anticipated, this week’s meetings between German and French leaders is ensuring that markets remain focused on the Eurozone debt crisis, which is keeping interest in Gold alive. Yesterday’s meeting revealed nothing startling, with German Chancellor Merkel merely commenting that negotiations were progressing well and that we might see signed commitment
within the next month. With another meeting scheduled for later today, markets seem to be rather optimistic (although no particular announcements are expected since no press conference is planned).

Gold are benefiting from a broadbased buying across asset classes. Most notably, and unusually, we’ve seen PGM take the lead today. Given that recently PGM hasn’t been benefiting as much
as gold and silver from safe-haven demand, the current upward momentum seems mostly to do with the renewed optimism in markets that has also pushed base metals, as well as equity markets higher. With US equity futures pointing to a day of gains, we expect this momentum to continue to keep precious metals on the up.

Another support factor for PGM is yesterday’s announcement by South Africa’s major power provider, Eskom, that it is currently struggling to meet electricity demand. More generating plants have been taken offline for maintenance than the utility had originally anticipated. This, it said, has raised the risk that the country might be subject to a repeat of the 2008 power outages,
which severely curtailed platinum production.

Gold support is at $1,618 and $1,602. Resistance is $1,637 and $1,640.