Oil price remains strong in European morning as driven by rallies in stock markets. Sentiment has improved significantly after central banks around the world showed efforts to revive the economy. Currently trading at 52.5, the May futures should trade firmly above 50 in the neart-term. However, we doubt if it can head for 60 without much volatility as investment demand has grown since last week. Any bad news, such as another week of inventory gain, will trigger profit-taking.

In Asia, the MSCI Asia pacific Index added almost 4%, the biggest jump since Dec 15 while Japan's Nikkei 225 Stock Average climbed d3.4%. In China, stocks have risen for the 6th consecutive day as investors speculate the nation will be first economy to recover from global recession with the Chinese government's stimulus plans.

Sinopec, Asia's largest refiner, gained 4.6% after the corporation said its profit may double to RMB 46.2B in 2009, following a first-in-7-years decline in net income in 2008. Other oil stocks also surged. Petrochina also gained 7.5%, which CNOOC (the largest offshore oil producer in China) also added 6.8%.

In European morning, UK's FTSE 100 Index climbed 1.7% as driven by banking stocks. In Germany and France, DAX and CAC 40 added 1.9 and 1.6% respectively. Market's focus today is on Treasury Secretary Timothy Geithner introduction on Public Private Investment Program.

The dollar's weakness continues to support gold. After the 3% intraday decline after the Fed's asset buying plan, the USD index's outlook remains bearish. Today, the index dropped 0.5% further to 83.31. Against the Euro, the greenback plunged to 1.3645 and it's not unlikely for another fall to 1.4 in the coming month.

A few weeks ago, we mentioned that gold's rally might not be sustainable as the dollar also strengthened. As a dollar-dominated asset, we believe the precious metal's upward price movement will be smoother if it's accompanied with dollar's weakness. With inflation expectation and dollar's long term weakness now in place, investors have better rationale to take long positions in gold.

One thing remains in concern is market's optimism in economic recovery. As investors become more optimistic in the economic outlook, their risk appetite improves and will eventually find investment in gold - low risk safe haven-less attractive.