gold

Gold continued to edge higher yesterday, as the technical picture had improved and specs added to longs. Better than expected Spanish and Italian auctions pushed Gold through 1650 and after the U.S. market opened up it continued to march to the high of the day at 1662.20 before cooling down, as Asians were rumoured to take profits. The usual selling out of Index rebalancing in the last minutes before the close led it fall below 1650 again. Stop hunters got incouraged and a few waves of selling caused Gold to drop to 1635.10, below the 200 day moving average on spot and washing out some weak positions. Today will see another round of Italian debt issuance, that will be followed closely. Given the fact that we saw again good buying interest in short dated upside strikes on both Gold and Silver, we feel that the market still has room to post fresh highs.