Gold to Gain on Investment Demand

July 3, 2012 – Gold gained to highs of $1,597 per troy ounce during trading Monday morning in London, which is flat compared with where the metal ended trading last week, while other markets inched higher after the release of better than anticipated market reports.

Gold has remained in the same trend line since early May, according to analysts with Scotia Mocatta. The bank sees technical resistance on the upside at $1,624 per troy ounce before a bearish outlook can be reversed.

Silver gained to $27.58 per troy ounce in trading yesterday, on par with the close last week, though other industrial commodities dropped with crude oil again down below $84 per barrel.

US Treasury bonds again moved slightly higher, while UK and German Bunds fell.

Eurozone manufacturing contracted again last month, with the Eurozone PMI unchanged at 45.1, which is just above consensus forecasts.

Eurozone joblessness ticked higher in may, with the unemployment rate up to 11.1 percent from 11.0 percent in April, published figures from Monday reveal.

The European Central Bank is widely expected to cut its main policy rate below the 1 percent level when it meets on Thursday, according to poll conducted by Reuters.

The president of the ECB, Mario Draghi, said Friday he is quite pleased with the outcome of last week’s European Union summit, which decided that rescue funds could be used to directly recapitalize banks following the creation of a single supervisory banking body.

In Vienna, Austria is today expected to become the most recent Eurozone country to ratify the institution of a European Stability Mechanism, a permanent bailout fund.

The German Bundestag voted in favor of ratification on Friday, though the measure still needs approval by the German Constitutional Court.

Barclays was fined £290 million last week after admitting some of its staff provided inaccurate information regarding the borrowing costs to the committee charged with setting Libor, the interbank offered rate which is widely used a benchmark.

In New York, the speculatively long position of gold futures and options traders on the Comex, calculated as the difference between bullish and bearish contracts, fell 16 percent during the week according to figures from the Commodities Futures Trading Commission.

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