Traders were taking off their short positions this morning on two of January’s weaker trades. Goldand the euro appeared positioned for a rebound after selling-off earlier this month, said Kanundrum Capital’s Brian Kelly. “I bought some gold this morning and the euro looks really strong,” said Kelly. “I am still short euro, but I will not be short euro for long.”
Joe Terranova, Virtus’ Chief Market Strategist, shared Kelly’s outlook on gold. Though he was short the yellow metal, he was reducing that position. “Gold is trading very technically,” he said, referencing the gold’s ability to stay above the 1,350 level.
The strength of both trades was somewhat related. Gold rise was due, at least in part, to inflation fears stoked by the dollar’s decline. And that drop was partially attributable to the Euro’s recent rise.
The Euro was climbing higher against a basket of currencies Tuesday morning thanks to strong economic sentiment in Germany and a report that Russia was considering buying Euro-zone debt.
Fears that euro-zone countries would be unable to tap the debt markets had driven the euro lower during the past year. But pledges to buy debt from China, Japan and now Russia, as well as the demand for Portuguese, Spanish and Italian debt auctions last week, allayed some of those concerns.
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