Gold,continued to languish yesterday afternoon as disappointing Eurozone figures

Gold, and the rest of the complex, continued to languish yesterday afternoon as disappointing Eurozone figures kept the euro on the back foot and investor enthusiasm remained lacklustre. Better-than-expected US data flow (jobless claims and the leading indicator) also contributed to reduced interest as a further dent to quantitative easing expectations.

Overnight though, Asian buying interest was forthcoming at the start of the trading day. This kept prices relatively stable for most of the trading session until some liquidation in gold brought prices down. This morning, gold has been tracking euro/ dollar movements with some euro weakness adding support. Indian buying in the physical market has also resurfaced providing an extra level of support.

Once again, we have some scheduled comments from Fed members, but these are unlikely to spark any marked reaction as it is improbable that these platforms will be used to bring up anything new on the Fed intended operations. In addition, market participants should be getting used to the idea that further quantitative easing appears extremely unlikely at his stage. To this end, if we see disappointing new home sales numbers we could see these quantitative easing hopes re-emerge. Continued housing market distress might see the Fed buy mortgage-backed securities, although it should be kept in mind that these would most likely be sterilised.

Gold support is at $1,633 and $1,616. Resistance is $1,663 and $1,675.