Gold forecasted to further appreciate
Further bullishness is expected for the precious metal as Libya's unrest persists for another day. Investors fear from inflation was clear yesterday after sending gold to close above the support at 1,410.0 an ounce, following the release of BoE minutes report which showed panel member's being more lenient to a Hawkish stand.
Price acceleration in UK persist, with inflation spiking at 4.0 percent last month, while expectations signal that inflation will average 4.4 percent this year, before heading south and drop near the desired rate of 2.0 percent by 2012.
Three panel members in BoE favoured the need to increase rates, while one member favoured the need to increase the APF program in order to support the economy that contracted by 0.5 percent in the fourth-quarter of 2010. Five panel members preferred to preserve interest and APF program at the current levels of 0.50% and £200.0 billion respectively.
Confidence in Europe are expected to rise when the report is released an hour from now, supporting the rise in economic conditions in Germany which enjoyed an expansion of 0.4% in 2010's fourth-quarter.
Nonetheless, safe haven demand increased, especially as oil prices are expected to rise, therefore, hedging against inflation remains the main theme for trading in gold as higher oil prices usually are reflected in higher inflation levels.
Gold spot traded near the opening levels of 1,411.32 to trade at 1,413.13 while setting a high of 1,415.45 and a low of 1,408.00. Gold futures dropped 0.03% or $0.400 to trade at $1,413.600 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. Gold is nearing a resistance at 1,416.54, which is breached, paves the path for the pair to target 1,425.00.
A downside correctional move is also expected as the Stochastic Oscillator remains heavily saturated as it's trading within an overbought areas, therefore, a profit taking wave could send the precious metal near 1,400.0 levels again.
China and India remains the two major market movers as speculation increased among investors that India will increase its gold reserves while China increased the Reserve Requirement Ratio (RRR) by 50 basis points, 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 extended its rise against the dollar, to trade at 1.3771 compared with today's opening levels of 1.3750, while the pound fell and traded at 1.6174, from the opening levels of 1.6212.
Dollar's Movement & Major Market Data:
The US dollar index, which tracks the performance of the dollar against six-majors, traded at 77.25, compared with the opening levels of 77.17, while setting a high of 77.47 and a low of 77.14. The dollar holds an inverse relationship with commodities as they are a dollar denominated assets.
The S&P GSCI index closed at 684.91 after gaining 14.65% in trading from the opening levels of 671.40, while the Reuters Jefferies CRB index traded higher by 3.45 percent, closing at 347.81 levels.
Talking about metal Fixes (Feb 23), Gold fixes at AM Fix was set at $1,401.25 an ounce, and by the PM fixing (Feb 23) at $1,409.25 an ounce, meanwhile silver fixing was set at $33.29000 an ounce and Platinum AM Fixing (Feb 23) was set at $1,823.00 an ounce, and at 1,794.00 an ounce during the PM fixing (Feb 23), finally the Palladium AM fixing was set at $814.00 at (Feb 23) AM fixing while being set by PM fixing (Feb 23) at $809.00 an ounce.
Silver for immediate delivery traded at $33.68 an ounce, compared with the opening levels of $33.53 an ounce, while setting a high of $33.74 an ounce and a low of $33.36 an ounce. Silver future contracts traded lower by 1.10% or 0.366 to trade at 33.670 an ounce
Platinum for immediate delivery traded lower by $9.50, at $1,777.00 an ounce, Palladium fell by $14.50 to trade at $762.00 an ounce.