Greece, the dollar weakened against the euro yesterday, which sent Gold prices rallying

Despite another postponed deadline in Greece, the dollar weakened against the euro yesterday, which sent Gold prices rallying. The Greek Prime Minister’s meeting with key coalition party leaders was postponed till today — the meeting is being held so that the Prime Minster can obtain the political support for the austerity measures that would ensure cooperation from international creditors. Perhaps the optimism was owing to reports that the ECB was willing to contribute to a restructuring of Greek debt. However, this is subject to a successful conclusion to the current debt restructuring negotiations.

Another contributing factor to yesterday’s dollar weakness and the subsequent push higher for Gold prices, was perhaps Fed Chairman Bernanke’s testimony to Senate Budget Committee. Although he stated nothing new (he had already testified a week earlier to the House Budget Committee), he dampened optimism over Friday’s payroll numbers by reiterating that the Fed felt that the US jobs market was still far from healthy.
Yesterday’s rally was followed by relative inactivity in Asia, which saw prices remain level overnight. This morning, not much has changed, with prices across the complex holding steady.

Physical buying of gold, especially out of China, has been quite strong despite the relatively elevated prices. However, we have seen a slight pull-back in physical demand after yesterday’s rally. Gold support is at $1,705 and $1,695. Resistance is $1,732 and $1,749.