Interest in gold from Far East client

Yesterday saw a rally across assets, as reports came through that the Greek government had reached agreement on the required austerity measures. However, these gains were soon reversed as Eurozone finance minsters postponed approval of the bailout package until next week Wednesday, citing that the Greek government’s budget proposal was incomplete. Three conditions remain before approval will be considered—a further €325m in cuts, Greek parliamentary approval (should be this Sunday) and a pledge from Greek political leaders that they will maintain the reforms after the country’s general elections (this
April). While indications are that the Greek parliament will approve these measures, there is enough uncertainty to keep markets on edge as we enter the weekend.

The announcement by the CME that initial margin requirements on gold futures will be dropped has failed to inspire much interest in the metal. Initial margins will fall to $10,125 per contract from $11,475, while the maintenance margin moves from $8,500 to $7,500. This is effective from close of business next Monday.
We are seeing some interest in gold from Far East clients, especially on the physical side after this morning’s fall to $1,720. This should keep gold supported, although, should it fall further we consider the range $1,700 to $1,720 as a good opportunity for establishing short positions.

Gold support is at $1,714 and $1,707. Resistance is $1,741 and $1,760.