Gold to continue the upside move after Bernanke's comments

Gold started this week strongly, posting the largest amount of gains recorded over daily basis since January 25, supported by the comments of the U.S. Federal Reserve's Chairman, Ben S. Bernanke, who said yesterday that the policy in the world's largest economy will remain accommodative, indicating at further easing and accordingly pressuring the low yielding greenback to the downside.

Gold added so far 0.14% or $2.38 per ounce to 1692.45 per ounce, compared with the opening level of $1690.07 per ounce. The metal set so far the highest at $1693.25 and the lowest at $1686.35 per ounce.

Gold rebounded sharply yesterday after recording a low of $1655.49 per ounce to reach the highest at $1693.32 per ounce, noting that silver, platinum, other metals and commodities in general all rebounded sharply yesterday after the U.S. dollar lost momentum and reversed sharply to the downside, where the USDIX (dollar index) dropped from the highest level of 79.70 to a low of 78.86.

Bernanke said yesterday that the improvement in unemployment reflects a reversal of the unusually large layoffs that occurred during the financial crisis; however, the chairman added that the improvement may lose momentum, clarifying that further reduction in jobless should be accompanied with continued accommodative policies.

Today, the yellow metal returns to correct some of the huge gains recorded earlier; however, we expect the metal to continue the upside move today especially after the metal was able to settle above the simple moving average (SMA) 20 and trades now around the SMA 50.

Moreover, our fundamental positive outlook is supported by our technical outlook, where technically speaking the metal is also expected to extend the upside move today as long as gold is stable above the critical levels of 1666.00 and 1656.00.

Some bulls in the market still expect gold to record a peak above $2000.00 per ounce in 2012, including the CEO of AngloGold, Mark Cutifani, who told reporters in Perth that the metal might average $1700-$1800 per ounce in 2012, while he added that we could see it peak at well over US$2,000 in my view, but it is going to move around a fair bit, I think, as news flow from Europe, the U.S. and other countries continues,

Among other precious metals, silver also extended the gain today, where the metal added so far 0.59% or $0.20 per ounce to currently hover around $33.02 per ounce. The metal started the session at $32.82 per ounce and recorded so far the highest at $33.03 and the lowest at $32.73 per ounce.

Platinum advanced as well today, adding 0.64% or $10.50 per ounce after the opening of $1648.50 per ounce to currently trade around $1659.00 per ounce. The metal reached a high of $1660.13 and a low of $1645.25 per ounce.

Palladium however declined slightly today, cutting 0.11% or $0.75 per ounce to trade in the moment at $668.50 per ounce. The metal recorded so far a high of $671.00 and a low of $665.17 after starting the session at $669.25 per ounce.