HXPM Gold Weekly Gold Review 110502: Dollar kept shrinking, gold hit record while silver tumbled

Weekly Gold Review (2011.05.02): http://www.hx9999.com/en/comment_week_707.html

Gold continued to rise and made another record last week. Early in the week market eyed on interest rate decision of the U.S. Federal Reserve meeting. Investors had believed no change in interest rate would be made but tended to look for hints of Federal’s market view and trend of interest from the meeting report. While the chairman Ben S. Bernake would hold a press conference after the meeting, market was still in wait-and-see mode. Gold mostly floated within range of 1,502-1518 USD last Monday, with a day high of 1,518.30 USD. Lacking of buying tendancy gold once fell to 1,492 USD on Tuesday.
After the rate decision meeting interest of dollar remained unchanged as expected, staying below 0.25%. Both the meeting report and Bernake’s speech indicated insignicancy of economic recovery. Officials were not likely to carry out rate hikes nor contractionary policies which might adversely affect the conditions. As the Federal said there should not be another quantitative easing whereas existing capital in market would not be withdrawn. The 600 billions USD injected before would continued to cycled in the economy.
Responding to the meeting result both capital and currency markets turned more negative towards the greenback. Euro rised to 1.4880 from 1.4500 and the sterling rised to 1.6740 form 1.6400 respectively.
The weaker the greenback the stronger the gold. Supported by capital inflow ad dip buying gold hit the historical high of 1,576 USD on Friday, closing slightly lower at 1,554 USD.
The commodity is likely to hover at higher of range early in the coming week. Air raid made by the Nato on the Lybian capital had killed a son and three grandsons of the president. Situation of the state might further deterioriated which should be favourable to oil price. Increasing defensive demand would also provide additional support to gold. Price is approaching to the 1,600 USD target. Initial resistance & target for the upside is USD 1,580 but upmove limitationcausedmomentum may be weak at that price.
Correction of silver would also threaten uptrend of gold. Silver tumbled for a extent of 7 USD, or 14.6%, on Friday from day high of 48.10 USD to 41.10 USD, closing at 43.60 USD. Trend had started to adjust since the early last week mainly because of the tightening requirement of margins for silver futures. Certain long positions closed in a vicious circle to push down the price. The commodity was expected to stay in the downtrend in short run, limiting the upside momentum of gold. range of gold was expected to shift to 1,505-1,585 USD in the coming week, continued to be bullish sentiment buttheremightbe some correction . While silver tended to move between 40-46 USD. Dip buying would be likely to take place at around 40-42 USD.