Gold rebounds in London trades as slide seen overdone

Gold rebounded in the London trades today, after lingering in a tight range earlier in the day as traders bought the yellow metal on ideas that the recent slide that took around $60 off the benchmark COMEX futures in the last three sessions was overdone in the face of strong fundamentals. The commodity went up for a low of $937.50 per ounce in Asia and currently trades at $ 953, down $10.40 per ounce after a sharp fall last night. The global equity markets continued to slip, making it possible for Gold to find a support around $940 per ounce mark on the COMEX The US dollar continued to maintain a strong bias against the Euro even as worries over the US banking space continued to hold sway. Last week, ECB president Jean Claude Trichet warned that the euro zone's financial system is facing challenging times, as financial markets and the real economy are dragged in a downward spiral. Major concerns are emanating on the Central and Eastern (CEE) economies in the Euro region and even as Germany has announced that it stands ready to protect the Eurozone if one of its member states found itself in such serious difficulty that it could not refinance its debt. Dollar maintained its firm undertone after more evidence emerged on the vulnerability of the Central and Eastern Euro nations. The World Bank, the European Bank for Reconstruction and Development and the European Investment Bank issued a joint pledge Friday to provide up to 24.5 billion euros ($31.2 billion) in aid to support Eastern Europe's bank sector. The greenback has been a beneficiary of the global risk aversion despite mounting problems on the US financials front and continued worries over the swelling budget deficit. US short term treasuries have been in great demand from the global investors, as the falling yields indicate and 1.2500 looks likely to be tested in the Euro/dollar pair in case the economic outlook continues to deteriorate. The greenback currently trades at 1.2668 against the Euro, compared to 1.2750 earlier in the day. MCX Gold futures went above Rs 15600 per 10 grams, hitting a high of Rs 15628 during the day. The April futures are trading up Rs 342 or 2.24% from the previous close with a massive 11% increase in the open interest.