Nervousness prevails in the market as Spain and Italy’s high bond yield continues to give jitter by reminding that the European sovereign debt remains a big unresolved issue. Bank of Spain Governor’s statement that Spanish banks need more capital weighed heavily, 10-years Spanish bond yield surged beyond 6 pct. Thursdays Italian bond auction is keeping market nervous.
Meanwhile, some of the Fed officials spoke on different occasions. They do not seem to be in favor of easing. Kocherlakota and Fisher spoke against accommodation and QE3 respectively. Today Fed official will continue to speak.
Gold made some later hour surprise recovery despite strong US Dollar after briefly hitting $ 1632. This was probably in reaction to European uncertainty and global stock market fall. Gold also got boost from end of Indian protest.
But volatility will continue and selling at high levels should dominate because until now FED officials are very clear that they are not keen for softer monetary policy and therefore no QE3. If FED is in no mood to ease then higher gold price makes little sense. China easing is the only hope, but with signs of strong GDP numbers on Friday, China may have to delay in softening its stance.
Again, today all eyes will be focusing on Europe and bond market will provide more clues. There are couples of German data, which may give insight about Germany’s economy.
Gold @ $ 1654.20 = Break of $ 1658-60 could push Gold towards $ 1666-68. However, I do not favor buying gold beyond $ 1665, as risk for fall will remain intact for $ 1547. Watch support level and break of $ 1642 level risk for more losses
Euro @= 1.3085 = Prefer waiting to sell around 1.3120’s as 1.3165 would be the next level to watch. Break of 1.3055 will push Euro further down to 1.3025.
GBP @ = 1.5872 = Cable has support around 1.5845-50 would watch and prefer buying with STOPS 1.5820, a convincing break of 1.5910 will help GBP to test 1.5930-35 zones.
EurO & GoLD coulD ProbE ToP B4 DowN - ApR 10