Calm trading in gold ahead of BOE Minutes report

The precious metal remained well above the support at 1,390.00 Wednesday, as inflation and political tension in critical regions in the world maintained support. Monday trading witnessed a surge in prices, marking the highest in seven-weeks, before the metal rebounded yesterday and dropped on profit taking techniques.

Gold spot traded near the opening levels of 1,398.85 to trade at 1,400.25 while setting a high of 1,401.70 and a low of 1,395.47. Gold futures dropped 0.05% or $0.700 to trade at $1,400.400 an ounce.

Technically speaking, the metal's trend remains to the upside as far as the support at $1,389.00 remains intact, while the 100-day MA support level is set at 1,374.00.

Investor's protection seeking from inflation increased demand for the metal over the past period, while geopolitical tension in the MENA area helped push commodity prices higher over the past few days, especially oil, on speculation that oil supplies from the Middle East would suffer from interruptions.

Nonetheless, Saudi Arabian oil minister said that KSA will meet any shortage of supply that could be influenced by the uprising in Libya.

China and India remains the two major market movers as speculation increased among investors that India will increase its gold reserves while China to hike its lender reserve requirements for the second time this year by half percent as inflation in China spiked at 4.9 percent in January, up from 4.6 percent a month earlier.

In FX-markets, the euro curbed its losses and rebounded to trade at 1.3716, compared with today's opening levels of 1.3647, while the pound followed the same trend and traded at 1.6199, from the opening levels of 1.6136.

BoE Minutes report to be released 09:30 GMT today, revealing the bank's outlook on inflation in UK, but mainly, expectations suggest that inflation in UK will remain well above the desired rate of BoE for the next-two years.

Inflation in UK currently stands at 4.0 percent, placing huge pressures on BoE to increase interest rates, but the fear of raising rates collides with growth where the economy suffered a contraction in the fourth-quarter of 2010, according to the Office of National Statistics preliminary report.

A revision is expected for growth in UK, where analysts predict that the contraction reached -0.4% only, nonetheless, it remains a contraction and that will lead investors to target haven, sending gold prices higher.

This week's data from Germany, the U.S. and U.K. will hold an important weigh on markets, as growth data will be released in the final two days of the week.

Dollar's Movement & Major Market Data:

The US dollar index, which tracks the performance of the dollar against six-majors, traded at 77.45, compared with the opening levels of 77.60, while setting a high of 77.65 and a low of 77.41. The dollar holds an inverse relationship with commodities as they are a dollar denominated assets.

The S&P GSCI index closed at 670.26 after gaining 12.64% in trading from the opening levels of 681.83, while the Reuters Jefferies CRB index traded higher by 2.58 percent, closing at 344.36 levels.

Talking about metal Fixes (Feb 22), Gold fixes at AM Fix was set at $1,394.50 an ounce, and by the PM fixing (Feb 22) at $1,401.00 an ounce, meanwhile silver fixing was set at $32.89000 an ounce and Platinum AM Fixing (Feb 22) was set at $1,823.00 an ounce, and at 1,821.00 an ounce during the PM fixing (Feb 22), finally the Palladium AM fixing was set at $837.00 at (Feb 22) AM fixing while being set by PM fixing (Feb 22) at $836.00 an ounce.

Other Metals

Silver for immediate delivery traded at $32.88 an ounce, compared with the opening levels of $33.06 an ounce, while setting a high of $33.06 an ounce and a low of $32.68 an ounce. Silver future contracts traded lower by 0.11% or 0.036 to trade at 32.820 an ounce

Platinum for immediate delivery traded higher by $9.00, at $1,804.00 an ounce, Palladium gained by $4.00 to trade at $809.00 an ounce.