Wednesday, May 2, 2012

Improved Performance of U.S. Manufacturing, Gold Down

Gold prices climbed on Monday in the improving technical outlook which can increase the gain last week, but gold closed slightly down for the month of April. Gold fell about 0.2% in April, for the third month and the longest monthly decline since 2000. A number of strong U.S. data and waning hopes of additional stimulus from the Federal Reserve has eroded the investment interest in gold.

Gold declined from a high level of 2 weeks on Tuesday as the dollar rallied due to the U.S. manufacturing sector data better than expected, dismissed speculation that the Federal Reserve will again ease monetary policy to boost the economic growth. The increase in U.S. manufacturing activity would provide additional evidence would not need further monetary injections from the Federal Reserve.

Without confirmation of support from the Fed on the U.S. economy, the rise in gold can be limited in the short term. In the near future, I do not see the possibility of gold through the $ 1700 level. Gold needs a catalyst to continue the rally. Can say, the level of $ 1.700 per troy ounce and above require other potential catalysts that trigger the Quantitative Easing (QE). It is definitely a very loose monetary policy would continue, but whether there is a need for QE III.

However, I do not see the potential for a significant fall in gold prices. Gold seems to have scored the lowest prices, and this can be a good start to add precious metals ownership.
We are in a condition where the market does not just follow the fundamentals, but more dependent on the market sentiment. The latest news is very influential on the price movement of gold.

The latest news is being awaited: release of U.S. payrolls data on Friday. This news would be one of the things that affect the price of gold. This news would be one of the trigger price of gold. If it's a bad news would raise the price of gold.

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