2010-09-01

US equities remain under pressure - positive for gold


















It is a data-heavy week, with ISM/PMI manufacturing indices for all major economies due for release. US employment data (ADP data on Wednesday and NFP data on Friday) could also keep the market nervous.

US equities remain under pressure, while US treasuries continue to rally (the 10y US treasury yield now stands at 2.50%, after touching 4% at the start of May). Both US equities and US bonds signal bearish sentiment towards especially the US economy. We note that the strength in US treasuries is supported by expectations of a possible bond purchases by the US Fed and
view these expectations of further monetary easing as positive for gold.

In the physical market, we continue to see gold buying, although it has slowed with the gold price above $1,230. With gold closer to $1,240 there also appear to be some gold scrap selling coming through.

Gold support is at $1,234 and $1,231. Resistance is at $1,239 and $1,247.

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