Physical demand for gold, which has been relatively good

Gold price received a shot in the arm late last week from a disappointing US non-farm payroll number, as market participants continued to react to changing expectations of further quantitative easing. Of course, a weaker US economy raises the possibility that the Fed will need to act. The upward momentum stalled over the weekend, although, with some decent interest from the Far East, precious metals remained relatively steady yesterday.

Disappointing Chinese trade data sparked some interest in the complex earlier this morning, as poor imports numbers signalled perhaps a deeper slowing down of the Chinese economy than originally anticipated. This saw some safe-haven buying emerge in Asia, and no doubt also propped up expectations that this could see the PBoC increase the pace of monetary easing. However, with European markets back today, it is once again the euro/dollar that is largely dictating movements in Gold price—with a strengthening dollar weighing on prices and reversing the early morning gains.

Concerns over the Eurozone sovereign debt crisis are back, with Spain the current focus. To this end, we could see some euro/dollar reaction (and consequently, a reaction from precious metals) from tomorrow morning’s Spanish industrial production figures. Physical demand for gold, which has been relatively good despite the protest action in India is likely to pick up, after it was announced that Indian jewellery stores would be reopening ahead of the Akshaytritya Festival which begins 24 April.

Gold support is at $1,635 and $1,629. Resistance is $1,649 and $1,656.