Trade sentiment remained mixed Friday as players monitored the days data releases, Eurozone ECONFIN discussions as well as carrying-out month and quarter-end related book squaring. The precious metals closed the day in positive territory up a net 0.85% after gold continued to base build above $1650 while the PGMs saw more of a mixed day. On the month the precious metals saw disappointing results with gold and platinum down around 2% while silver and palladium declined 7%; on the quarter however the metals gained with gold up 6.6%, silver 15.8% and platinum 17.5%, palladium was up just 0.1%.

European finance ministers agreed Friday to increase bail-out resources in a bid to prevent further default contagion amongst its most heavily indebted members. Officials increased the fiscal firewall to around €800bn after raising the ceiling on the ESM/EFSF programmes, but despite the deal some still view the deal as insufficient to fully contain a further escalation given that more than a third of the funds are already committed to rescue deals for Greece, Ireland and Portugal. Market reaction to the deal saw the euro gain, closing up 0.2% against the dollar and 0.7%; equities also gained with the Eurozone Stoxx 50 Index up 1%, the Dow 0.5% and S&P500 0.4%.

Positive Chinese manufacturing statistics over the weekend prompted a strong start for equities this morning however markets have since pared their gains amid lacklustre data from the region and speculation Chinese officials are unlikely to ease monetary policy in the near-term. Manufacturing PMI improved from 51.0 to 53.1; the HSBC gauge improved fractional from 48.1 to 48.3, at the time of writing the Nikkei was up 0.25% while the MSCI Asia Pacific Index was up 0.1%. After a steady start the euro has given back some ground this morning with the single currency currently off 0.1% against the yen and 0.2% versus the dollar; the dollar index is currently up 0.2%.

Data overnight has shown the Australian AIG Manufacturing Index contracted from 51.3 to 49.5 while Japan’s Tankan Manufacturing Index disappointed, remaining unchanged at -4. Australian Buildings Approvals declined -7.8% from a previous 1.1%. The line-up for the rest of the day includes Manufacturing PMI gauges from the Eurozone, UK and US as well as EU Unemployment Rate.

The precious metals have seen a softer start this morning with the complex currently off a net 0.4%. For the moment the metals continue to base build above key support levels and following the recent period of consolidation and improving risk appetite the complex may be set to gain, however a breach of $1645 in gold, $1656 in platinum and $638 in palladium still has the potential to trigger deep corrections. Gold may also see support from the physical sector in the coming weeks in the run-up to Akshya Trithiya, although wholesale demand remains lacklustre for the timebeing due to ongoing protests follow recent tax increases.

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