Gold Daily Outlook for April 5, 2011

Gold started Monday’s trading in a positive tone, targeting levels at 1,440.00 an ounce, after lack of data from major economies and inflation threats in Europe, lured investors to target safety.

Inflation accelerated to the fastest pace in two-years, according to Euro-Zone’s PPI gauge, pushing traders to target gold to hedge against inflation. The sideway trading remains valid ahead of ECB’s rate decision (Thursday at 11:45 GMT), which would send the metal to fall as the bank is expected to hike rates to control inflation levels, causing the euro to drop and the dollar to gain, which accordingly, influences gold trading due to the inverse relationship the dollar holds with commodities.

The major influencing factor on the metal’s trading Tuesday would be the Fed’s Minutes report (18:00 GMT), which may reveal the bank’s outlook on the $600 billion stimulus plan that is scheduled to persist until June.

The dollar would fall if the purchases continued as plan, causing the metal to rise further, while any changes or withdrawal of the stimulus measure would cause the dollar to rise and the metal to fall.

Furthermore, the metal may fall on Services sector’s performance in Europe which is expected to witness easing activities in March, causing the euro to fall and the dollar to rise.

Until Thursday, the metal is expected 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-5-2011/)