Gold Daily Outlook for April 4, 2011

Gold descended Friday after the US economy added more than 215.0 thousand jobs last month while unemployment dropped to 8.8 percent, damping demand for safety as recovery persist in the world’s leading economy in a strong pace.

The need of stimulus measures presented by the Fed last year may come to an end sooner than June’s deadline, which would cause the dollar to rise against majors as recovery persist in the country. Further bearishness is expected for the Euro next week as BoE and ECB disclose their decision in regards of rates where the BoE to release its decision Thursday at 11:00 GMT with expectations that the rate will be preserved at 0.50 percent.

Meanwhile, the ECB will release its rate at 11:45 GMT with expectations of interest rate hike of 25.0 basis points as inflation moves to threatening levels. Hedging against inflation would cause the metal to rise but the hike would cause the euro to fall and the dollar to gain, therefore, giving the inverse relationship effects on commodities, the precious metal is expected to fall to levels near 1,400.00 an ounce, and target levels at 1,390.0 an ounce.

Slight correction may force the pair to sustain trading above 1,400.0 an ounce as investors take advantage of low prices, awaiting central bank’s decision on rates that would send the metal to decline further.

(Source: http://www.commoditiesmansion.com/commodities-news/gold-daily-outlook-for-april-4-2011/)