Gold Fundamental Analysis for April 18, 2011

It has been a week since Portugal asked for a bailout from the European Union, putting the country on the same path of Greece and Ireland, with speculations that Portugal may be denied bailout by Finland and Greece to acquire additional aid after bond yields surged to a record and Moody’s Investors Services slashed the country’s debt rating.

Greececurrently holds a Baa3 rating by Moody with a “Negative” outlook, as the government prepares to unveil further budget cuts to ensure that the government would meet its deficit targets.

Debt woes and inflation threats have been driving commodity prices higher, while China’s unexpected growth rate and above than expected inflation levels pushed the metal to record new historic highs near $1,480.0 an ounce.

Gold is expected to drop severely to return and trade near 1,420.0 an ounce and probably extend its drop to 1,400.0 and 1,390.0 as investors take advantage of elevated prices and seeks profits, nonetheless, a failure to breach 1,445.0 an ounce would pave the path for the metal to target 1,480.0 and then 1,500.0 an ounce as inflation reports will arrive from Germany, UK, and the Euro Zone, along with current account data that that will be released at 09:00 GMT, which may add upside pressures on the metal to ascend further.

(Source: http://www.commoditiesmansion.com/fundamental-analysis/gold-fundamental-analysis-for-april-18-2011/)