London, 30 March 2010

Gold gained ground over the past week following a pronounced rebound in the euro, with the bullion breaching our intermediate resistance at USD 1,105. The whole precious complex has rallied in the past few sessions with silver and platinum once again slightly outpacing gold.

"This was largely a relief rally that followed the long awaited Greek rescue deal. Importantly, euro sentiment is likely to remain downbeat and we have not had quite as complete a turnaround as it might seem," according to  Andrey Kryuchenkov, Commodities Analyst with VTB Capital in London

"The IMF’s involvement in a potential deal, tough rules on the alleged EUR 22bn bailout package and the fact that the debt-stricken will have to exhaust alternatives available on the open market, all only add to the complexity of the situation and still diminish the euro’s appeal when compared with the dollar or other major currencies.

"This holds without even mentioning similar financial difficulties and underlying debt troubles in other Eurozone members including Ireland, Italy and Portugal. So, the future of the dollar-denominated bullion will find little support from currency hedgers and players wishing to protect themselves from a potential dollar depreciation later this year."

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