Gold breaches $1,590 after Weidmann says "Eurozone crisis not over"

After trading sideways for several sessions, gold bullion jumped above $1,590 an ounce for the first time this month Tuesday morning in London, in what analysts called a "technical" move after gold broke through a key level following remarks from Bundesbank President Jens Weidmann.

"We see support at the bottom of the sideways range at $1,561 and resistance at the top at $1,586," said yesterday's technical analysis note from Scotiabank.

Gold rose above that level however shortly after Weidmann told reporters that the Eurozone crisis "is not over" and said that the Eurozone has "declining inflation risks".

Weidmann was presenting the German central bank's 2012 results, which show it more than doubled the amount it holds in reserve for what Weidmann called "risk provisioning."

Silver meantime rose to $29.25 an ounce this morning, still below last week's high, as other commodities were broadly flat on the day and US Treasuries gave up earlier gains.

European stock markets were also flat, a day after US markets rallied and the Dow Jones set another new record, having beaten its 2007 nominal peak last week.

Gold in Sterling meantime hit a five-week high above £1,070 an ounce as the Pound fell this morning, while gold in Euros rose to a two-week high above €1,225 an ounce.

"We still doubt a sustained rebound [in gold] is warranted at this point while the market is set to remain depressed," says Andrey Kryuchenkov, analyst at VTB Capital.

"Strong physical demand in China is the main reason behind gold's resilience," one trader in Beijing told newswire Reuters this morning. "But the overall sentiment in prices is still weak. If demand from China weakens and we continue to see good US [economic] data and a stronger Dollar, gold has the chance to test $1,500 this year."

On February 18, the first trading after Lunar New Year, volumes on the Shanghai Gold Exchange for its most popular gold contract, The Au9999, set a new record of just over 22 tonnes. Since then, daily Au9999 volumes have been more than double last year's average.

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