BULLION MORNING - Gold off fresh highs but steady above $1,500/oz, uptrend still intact

By: Royston Wild

London 26/04/2011 - Gold moved off fresh record highs in European morning trade on Tuesday following the onset of sustained profit-taking, although it held firm above the $1,500 marker and looked well positioned for further gains.

Spot gold - which hit yet another all-time summit of $1,518.45 per ounce on Monday, the eighth consecutive daily record - stepped back to $1,504.25/1,505.05, down $2.27.

On the charts, resistance is currently pegged at $1,508, at yesterday's record high and then at $1,547/1,550. Support is back at $1,495, $1,474 and $1,444.

Despite the pullback from new peaks, the yellow metal looks set to rise further given the current macroeconomic backdrop, analysts said.

"We think the uptrend could likely continue especially for gold in the near term," broker Credit Suisse said. "The gold market is benefiting from a combination of low interest rates and rising inflation expectations, [while] the discussion over the credit worthiness of sovereign borrowers has only started."

Concerns over the resolution of rising government debt levels - particularly in the eurozone and the US - combined with fears over rising inflation and a worsening geopolitical landscape across the Middle East and North Africa (Mena) region have kept safe-haven interest in bullion well supported in recent weeks.

Gold was given an additional boost in thin start-of-week trade yesterday, amid reports that China was considering to diversify its forex reserves into energy and precious metals.

In wider markets the dollar slumped to a fresh 15-month nadir of 1.4650 against the euro and was last at 1.4627, still down well over half a cent from the previous session.

WTI crude traded at $112.35 per barrel, up fractionally - it had appreciated to a fresh two-and-a-half-year high of $113.48 on Monday.

In data, S&P/Case-Shiller Composite-20 HPI, CB consumer confidence and Richmond manufacturing numbers are due in the US later today.

But the latest FOMC rate statement scheduled for Wednesday looks set to dominate investor attention, which markets will be closely watching for clues over possible interest rate hikes there in the near future - rates are expected to be kept on hold at 0.25 percent at tomorrow's meeting.

"Given the pace and scale of gains in gold and silver in recent weeks there is the threat of a deeper correction in the coming sessions, particularly if the FOMC minutes tomorrow indicate the Fed is close to starting monetary tightening," analyst James Moore of FastMarkets said.

Investors are also eagerly awaiting advance first-quarter GDP readings due for release on Thursday.

Among other precious metals, silver had surged to a fresh 31-year peak just shy of the $50 mark at $49.81 per ounce on Monday, before retreating heavily in volatile afternoon trade as heavy bouts of profit-booking set in.

At $45.99/46.04 it was last 68 cents lower.

Silver has risen 33.6 percent in the space of a month to yesterday's fresh high, in turn sending the gold/silver ratio to a fresh low since January 1983 at 30.45.

Platinum - which edged to its most expensive since March 7 at $1,841 in the previous session before steadily retreating - was last indicated at $1,810/1,820, $13 lower.

Palladium fell $8 to $750/760 per ounce - it had risen to one-and-a-half-week peaks of $777 on Monday.

(Source: http://www.fxstreet.com/news/forex-news/article.aspx?storyid=e2c91785-75c2-4d30-8170-732edec86362)