Gold Inches Up To Above $1,110 Level

The U.K. has emerged from recession with a slightly better than expected GDP figure for the fourth quarter of 2009, although there's still some fear that the path to growth will be rocky. Monetary policy is likely to stay loose. The first day of trading for the Grecian government's new seven-year issue didn't go well for the bond: its yield rose to 6.078 percent from its priced 6.001. If it keeps falling, there'll be more refinancing difficulties down the road.

Through it all, gold didn't react much. The metal spent most of the night between $1,108 and $1,110, before breaking through on the upside a little after 11 PM ET. It wasn't much of an ascent, and $1,110 did not hold firm as a support level in the early morning. The price peaked at $1,114.30 as of 2:30 AM. Since then, the metal slid down to $1,107.90; that bottom was reached as of about 6:15. The metal subsequently rose above the $1,110 level but slipped back. As of 8:12 AM ET, spot gold was at $1,109.80 for a gain of $0.80 on the day. The Kitco Gold Index attributed -$0.50 to predominant selling and +$1.30 to a weakening greenback.

The U.S. Dollar Index spent last night drifting, mostly downwards. Starting at 1:35, the drift turned into a drop that took it down to 81.0 by 2:25. Since then, the Index rallied back before settling into a somewhat ragged trading range bordered by 81.125 on the downside and 81.2 on the upside. As of 8:18 AM, it was at 81.17.

The regular Wall Street Journal morning report attributed gold's slight gain to the aftereffects of the Euroland deal.

The precious metal complex rose in the past few sessions after the long-awaited Greek rescue deal was announced, causing the euro to strengthen from the 10-month low hit against the dollar last week and boosting commodity prices overall. Activity may now be generally quiet for the rest of the week with many markets closed Friday for the Easter weekend....

VTB Capital analyst Andrey Kryuchenkov said he expects the Greek deal euphoria to end in the near future because "underlying debt problems in Greece and other euro-zone countries have not disappeared all together."

Also mentioned is a probable focus on other data now that the Eurocrisis has calmed down.

A Reuters report notes the thinness of overnight trading, and the fact that there was almost no activity in the Asian physical markets. What little gain there was, was attributed to a recovering Euro.

"I think sentiment is really neutral. It's stuck in a range of $1,080 and $1,130," said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong.

"Gold is watching the dollar. Everybody is in a holiday mood. Nobody wants to commit too much ahead of the Easter weekend."

Also mentioned is a rise in the holdings of the SPDR Gold Shares trust (GLD): they increased by 5.176 tons yesterday.

Bloomberg's regular report, as webbed by Business Week, attributes the slight gain to the same cause but mentions an interesting fact: the above-mentioned increase in GLD's holdings has put its gold hoard at the highest level it's been this year. That, in a range-bound market.

“As we enter the second quarter of the year, downside pressure from weak seasonal demand should ease, although upward potential is also expected to be limited,” Stefan Graber, Singapore-based analyst with Credit Suisse Group, wrote in a note to clients. “Investors should expect price gains for gold in 2010 to be considerably smaller than in 2009.”

As regular trading opened, $1,110 was fallen through more definitely. After fluctuating around that level, a drop set in starting just before 8:30 that took the price down a couple of dollars an ounce. As of 8:53, the spot price was at $1,108.30 for a drop of $0.70 on the day. The Kitco Gold Index had +$0.45 for a weakening greenback and -$1.15 for predominant selling.

The U.S. Dollar Index, as indicated above, did rally since regular trading began. The above-mentioned trading range was broken through on the upside; by 8:42, the Index has reached 81.27. As of 8:54 AM, it was at 81.25.

Indications are that today's session will be quiet. The ebbing-Eurocrisis driver is fading, and there isn't much that looks likely to push gold higher (or lower.) The U.S. Dollar Index is still sinking overall, but not by that much now. Gold's session today may wind up tepid.