Gold Daily Outlook for April 7, 2011

Gold trading Tuesday closed on record high, to add further bullishness by Wednesday’s trading due to the unexpected rate hike by China’s central bank, which was the third-hike this year.

Inflation threats and debt woes sweeping across Europe caused traders to target safety and push the metal above a pivot resistance at 1,455.50. The metal is now testing a resistance at 1,460.00 an ounce, ahead of ECB and BoE rate decision.

Inflation threats among investors were spread on the hike, while speculation that the ECB will hike rates at tomorrow’s rate decision meeting (11:45 GMT) may add further pressure on the metal to ascend and touch new historic highs near 1,460.00 an ounce, and probably ascend to 1,500.00 as inflation threats would be validated, therefore, traders would hedge against inflation by targeting the precious metal.

Nonetheless, with the hike expected, the euro will fall and the dollar will gain, accordingly, limiting the rise of the metal due to the inverse relationship with that joins the dollar with commodities.

The metal is expected to sustain trading above 1,420.0 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-7-2011/)