Gold Daily Fundamental Analysis for May 18, 2011

Gold was still under heavy downside pressures on Tuesday and mainly trended to the downside on the still generally firm dollar and more proof that large investors and hedge funds did dump their gold holdings in the first quarter.

The metal was pressured the most by the flow of the latest 13-F filings –which is a quarterly reporting form of security holdings filed by institutional investment managers to the SEC- that showed investors cutback heavily on their precious metal holdings in the first quarter as did George Soros that dumped his gold holdings in the quarter.

With the confirmation of big investors and hedge funds dampening the metal in the first quarter despite the rally to new all-time records, the metals were pressured to the downside under more profit taking and extended downside correction.

Investors are now weighing the move for metals and the recent rally as bulls shy away from the metals and still see high uncertainty this period with the correction still not coming to an end.

We expect gold to be still pressured by the 13-F filings on Wednesday, yet more dominantly we see that the developments in the European debt crisis that remains a heavy weight on the market with the possibility of Greek debt rescheduling and the FOMC minutes.

On Wednesday the FOMC minutes that will confirm the low Feds rates for an extended period of time, which will be some support for gold to attempt to cutback on the losses as far as the dollar returns south with the reminder from the minutes since in generally their impact on the market will not be very heavy as Bernanke already provided the latest updates on the outlook for the monetary policy after the decision.

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