Euro hurt as Germany tempers hopes for new deal
City Index October 18, 2011 8:53 PM
<p>German leaders are tempering hopes that an upcoming summit would result in a deal that will resolve the continent’s sovereign-debt crisis. Gold Range: 1,665.41 – […]</p>
German leaders are tempering hopes that an upcoming summit would result in a deal that will resolve the continent’s sovereign-debt crisis.
Gold prices eased back yesterday as the dollar index picked up in the wake of comments from Germany’s Finance Minister Wolfgang Schauble who took the shine off risk by stating that a solution to the EU debt crisis would not be forthcoming at the next summit meeting. The move led euro and stocks lower, impacting the precious metal markets. Gold initially headed high in Asia yesterday, buoyed by crude prices to a high of 1,695.15 from opening levels of 1,680. The metal soon lost its shine however, falling in tandem with the general appetite of risk to lows of 1,664.90 in New York last night, closing around 1,671. Asia saw a small rally up to 1,677 this morning before easing back to 1,670. Support is now seen towards 1,665 and 1,653 with resistance at 1,695 and 1,700.
Euro-dollar closed in New York at 1.3738, off session lows of 1.3726. Early Asia made a weak effort in targeting reported stops sub 1.3720, with the rate meeting decent demand interest at 1.3725-1.3720 which placed a base at 1.3725 before recovering. Asian sovereign demand was noted off the lows. The rate traded to an initial high of 1.3772 before backing off to 1.3760, as RBA minutes came in on the slightly dovish side, but fresh demand quickly emerged to take the rate up to highs of 1.37884. Release of weaker than forecast Chinese GDP data knocked the rate back to 1.3750, recovering back to retest highs before settling between 1.3770-1.3780 ahead of the European open. Offers remain in place at 1.3790-1.3700, further offers at 1.3820 ahead of stronger interest at 1.3840-1.3850. Support at 1.3725-1.3720 and then at 1.3700-1.3690.
Cable closed in New York at 1.5743, off session lows of 1.5733. The rate initially dipped to mark Asian lows at 1.5742 before recovering, the move up aided by reported Asian sovereign buys. The initial rally met resistance ahead of 1.5800, with the rate backing off to 1.5770 as markets reacted to the release of slightly dovish RBA minutes. However, fresh buyers quickly emerged to take the rate on to session highs of 1.5822. The rate settled back between 1.5790-1.5810 into Europe. Offers remain into 1.5822, a break of 1.5830 to expose 1.5850. Support now seen at 1.5755-1.5750, ahead of 1.5735-1.5730 and 1.5700.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.