Optimism Supports Gold

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The Asian equities opened on a stronger note on hopes of increased optimism over the Euro-zone leaders meeting scheduled this weekend, however the strength remains weak. Presently, the market is rather confused regarding the Euro-zone’s development and lack of easing from China and US (the major global economies).

This morning base metals are trading down by 0.05 to 0.27 percent except Copper at LME electronic trading.

Chinese smelters are lobbying the government to revive a state-run scheme to stockpile industrial metals that would support prices and possibly lead to a surge in imports after the central bank refrained from easing and may continue to weaken riskier assets including base metals in today’s session. There are no major economic releases scheduled for the day and even the events calendars remains empty and may likely provide a subdued market ahead. From Europe, the Luxemburg Prime minister along with the Euro-area finance ministers is going to visit Greece tomorrow to discuss the austerity regarding extension of another two year and may likely keep financial assets and base metals at tenterhook.

However, slight optimism regarding the weekend meeting of Greece, Germany and France is still felt in the air regarding the development and may likely stabilize the shared currency limiting downside for base metals. From US, the Fed’s FOMC might further highlight delay in QE3 tomorrow while the markets may remain subdued due to aggravating delay in easing and may likely support downside in base metals. Therefore, at one end hopes of optimism might hold the metals from falling while at the other, lack of positive triggers and no timely monetary or fiscal loosening might continue to weaken future prices.

Gold is seen trading flat at $1620 levels and it is more interesting to see euro  is almost stable at $1.2346 levels. We are going to see a very quiet day today, as there are no major data expected from any part of the world.

In fact, all currency pairs are trading mixed while US dollar Index is at 82.44 marginal changes over previous close. Looking at the treasury side, it looks like they are also likely to stay calm today.

Increasing investors’ optimism on US economy may reverse the hope of quantitative easing. Overall, we are seeing a very doleful day as far as gold price trend is concerned.

Silver is seen trading flat at around $28.72 from its previous close however, there could be some slight gain on this commodity as prolonged effect of buyers’ interest should push the white metal to move higher.

Nevertheless, it is also important to note, markets may not see any significant move as overall the day is void of any major data and events. Keep an eye on the overall metals pack as precious metals are expected to be range bound.

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About:FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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