Gold prices gained back last week, as it took advantage of the safety demand amid the undergoing concerns in the euro area rising, which provided gold prices with strong bullish momentum, where fundamentals from the euro area showed contraction in manufacturing and services for the fourth month and drop in confidence to two-year low while the main cue was the decline in demand on German bonds and rise in French bills yield at auction.
Data from the United States were generally better than estimates, which further supported confidence over the outlook of the world’s largest economy, and provided gold prices with bullish momentum as well.
This week, the main focus will be on the BoE rate decisions, trade, manufacturing and inflation data from the U.K. while the U.S. will release retail, trade and confidence, as well as other data.
Moreover, several euro zone nations are preparing for bond auctions, where all eyes will be focused on the yields and demand on those bonds, noting that the euro area region has more than 157 billion of debt maturing in the first quarter of 2012.
Traders will continue to focus their attention on Europe this coming week, where the European Central Bank is expected to keep its rates unchanged, in order to ease tensions in markets and help support confidence amid the worsening debt crisis in the euro zone region.
We continue to expect that gold prices will rise over the coming period, we expect gold to go up to $1680 levels in the coming days & downside we see a major support around 1580 levels, however, we also expect volatility to continue to dominate gold prices over the short term, as despite the recent improvement in overall conditions, yet risks are still threatening the progress of improvement, especially as the outlook for global economies remains full of uncertainty. We also expect Europe to continue to dominate the headlines next week.
Compiled by Mitesh Rasaikar, CEO (Marketing & Finance), May Iron Ores
