Gold consolidated its recent gains yesterday as wider markets showed some signs of risk appetite, helped by the release of the Fed Beige Book showing the US economy continued to expand at a “modest to moderate pace”. The yellow metal closed little changed, settling around the $1660 mark having been confined to a relatively tight $10 range. The rest of the complex finished in negative territory however with silver off 0.2%, palladium 0.7% and platinum just over 1%.

Equities closed Wednesday moderately higher with the Stoxx 50 Index up 0.8% and the Dow & S&P500 around 0.7%. But, despite the gains Eurozone debt jitters continued to bubble away with the yield on the Spanish 10-year note edging above 6% while Germany failed to fully cover an auction of 10-year bunds, covering €4.1bn of the €5bn on offer at a rate of 1.77%, the yield declined to a record low of 1.64% by the close. Rising equity price did help lift the euro however with the single currency settling up 0.3% against the dollar and 0.6% versus the yen.

Equity gains have continued overnight, helped by the positive close in markets yesterday and pledge by the Bank of Japan governor Masaaki Shirakawa to pursue “powerful easing” in order to conquer deflation. At the time of writing the MSCI Asia Pacific Index is up 0.3% and the Nikkei 0.7%. Limited reaction has been seen in the currencies so far with the yen off 0.2% against the dollar and euro; EUR/USD was trading up 0.1%.

Data today will show Eurozone industrial Production, UK & US Trade Balance and US PPI & Jobless Claims. In addition Italy is due to auction as much as €5bn in debt maturing at various dates out to 2023 while various Federal Reserve FOMC members are scheduled to speak.

The precious metals have seen an uneventful start so far with the complex a net unchanged at the time of writing. While the steadier tone in equities and better data today could prompt some profit taking today’s debt auction by Italy will be under close scrutiny, with poor demand likely to increase concerns about the EU’s fourth largest economy’s ability to fund its debt requirements. Given the return of debt worries gold will likely remain underpinned in the coming sessions although the metal still remains capped by overhead trendline resistance around $1680 and is below the 200DMA ($1696).

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