London 12/09/2012 - Gold edged higher on Wednesday morning trade in Europe after the German Federal Constitutional Court in Karlsruhe approved the legality of the European Stability Mechanism with conditions.
Spot gold was last trading at $1,743.47-1,743.85 per ounce, up $10.15 from Tuesday’s close. Earlier, the metal hit an intra-day high of $1,747.31.
“Germany’s Federal Constitutional Court has given the green light for the European ESM bailout fund – albeit with a number of conditions, though these are unlikely to noticeably sour the mood of market players. The euro appreciated against the US dollar in response to the decision, precious metal prices also profiting as a result,” Commerzbank said.
Earlier this morning, the German Federal Constitutional Court in Karlsruhe approved the legality of the European Stability Mechanism with conditions.
The court said that a cap of around 190 billion euros is to be placed on German liabilities before ESM consent, unless the parliament provides extra liquidity.
In response to the news, the euro gained against the US dollar and was last trading at 1.2890. Earlier the euro hit as high as 1.2906.
As well, the Federal Open Market Committee starts its two-day meeting later today, with many in the market expecting it to announce a third round of quantitative easing - so-called QE3 - or a similar measure in its statement on Thursday.
The mood was also reflective of optimism over China's economy. Premier Wen Jiabao said on Tuesday that China is on track to meet this year's target for economic growth and if needed, the government could utilise a 100 billion yuan fiscal stability fund to boost growth.
Datawise, industrial production month-on-month for July came in at minus 0.2 percent, it was previously at minus 0.6 percent.
Japan’s core machinery orders climbed 4.6 percent, but tertiary industry activity dropped 0.8 percent, while deflation remains in place with CGPI falling 1.8 percent. However, German and French CPI beat expectations – coming in up 0.4 and 0.7 percent respectively.
On the MCX, gold was last trading at 31,954 per ten grams just below the high of 32,450 hit over the weekend.
“Investors are on the sidelines, prices are still very high,” an Indian-bullion dealer said.
Amongst other precious metals, silver was last trading at $33.95-34, up 44 cents from Tuesday’s close. Platinum hit $1,634.50-1,640, up $36.40 from Wednesday’s close. While sister metal palladium was last at $675-680 up $9.60 from the close.
(Editing by Yoke Wong)