Gold was pushed higher during New York trading hours

Gold was pushed higher during New York trading hours yesterday, reaching a 3-month high on electronic trading momentum. The move higher was accompanied by light physical selling, which was extended by participants in Asia (both China and TOCOM). This, together with some profit taking (augmented by a stronger yen), put some downward pressure on the metal overnight.

This morning, we initially saw an extension of the overnight weakness. However, a spike of dollar weakness saw gold push upwards to the $1,780 mark, before subsiding back to the around $1,775. Silver reacted more markedly to this morning’s dollar weakness, and has managed to hold onto most of these gains. However, this point of support (i.e. dollar weakness) is not expected to hold, as the market digests the EU’s interim economic forecasts. The report warns that the Eurozone will most likely enter a “mild recession”, which could put a dampener on sentiment, only recently (and perhaps prematurely), buoyed by the approval of Greece’s bailout.

Once gain the effect of this afternoon’s US data flow, the dollar will most likely dictate price movements in Gold. Today, we have jobless claims, house price and Kansas City Fed manufacturing activity data. An improvement in the manufacturing is expected, while jobless claims are expected to rise and house price growth is expected to ease.

Gold support is at $1,757 and $1,737. Resistance is $1,791 and $1,803.