By Commoditiesmansion.com – Gold was little changed on Tuesday and holding to its new records as the metals eyes the psychological $1,500 which is pressuring the metal to fluctuate heavily.
The sentiment moved into positive territories with the upbeat industry reports from Europe that showed continued strong expansion and was followed by strong housing data from the US. The fundamentals were coupled with upbeat earnings which helped ease fleeing to gold.
Nevertheless, we can still see the upside support for the metal as more historic highs are to be seen in this period with prevailing uncertainty over the outlook for the global recovery. The US credit outlook downgrade to “negative” from S&P is a worrisome factor for the market amid European debt woes and instability in the Middle East and natural disasters that already affecting the global economic balance.
We also can not forget the inflation predicament for economies and for investors, and all are factors keeping the upside bias on the metal intact. The dollar is weak and gold is the perfect hedge still and store of value as investors further diversify from greenback.
For Wednesday, the volatility will be dominant as the metal trades around historic high levels. The BoE minutes will be eyed for inflation comments from the MPC though lightly to influence the metal as the focus turns to the US housing data at 14:00 GMT.
After the strong reported rise in housing starts in March, investors eye existing home sales for the month which are also projected with 2.5% rebound following 9.6% slump to 5.00 million units.
The data if remained strong with the turning sentiment to positive the dollar will likely hold its weak grounds supporting gold while the upbeat sentiment will ease the haven demand which will keep the volatility and heavy fluctuations intact, thought we still favor more gold gains.
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