Increased concerns over the Eurozone sovereign debt situation, continues to provide support for gold

Gold rallied after last Friday’s disappointing US payrolls data, as a renewed bout of risk aversion kicked in. December saw only 103k jobs added to the US economy, compared to consensus expectations of 150k with the bias firmly to the upside. The numbers weren't terrible by any means, with the unemployment rate falling to 9.4%, however, it was enough see gold and silver
rally, in spite of the subsequent dollar strength.

Increased concerns over the Eurozone sovereign debt situation, continues to provide support for gold. However, the associated strengthening of the dollar against the euro is slowing upward price momentum. On balance however, we expect the concerns over the Eurozone situation of outgun the impact of a stronger dollar. Therefore, any uncertainty over the strength of US economy and/or heightened concerns over Europe’s fiscal situation are likely to be supportive for prices.

Gold support is at $1,356 and $1,341. Resistance is at $1,383 and $1,394.