Gold have enjoyed the support coming from a weaker dollar


Along with the other commodity groups, Gold have enjoyed the support coming from a weaker dollar, after yesterday’s rate hike by the ECB. A clear indication that the moves are mostly driven by the forex market is that in euro terms, precious metals prices remain largely unchanged. Although some profit-taking was evident, short-covering managed to push
prices higher.

With not much in terms of data flow today, comments by Fed members Fisher and Lockhart (scheduled to speak at events later today) may be seized upon. Should any comments increase speculation that Fed members are becoming increasingly polarised on the issue of monetary accommodation, we could see some volatility in precious metals markets. As highlighted previously, we foresee that as the deadline for QEII draws near, increased uncertainty and speculation among market players concerning the possible paths the Fed might follow could result in increased volatility in Gold prices.

Gold support is at $1,459 and $1,449. Resistance is at $1,472 and $1,475.

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