Gold and silver correct but bullish sentiment remains intact
Gold and silver pullback slightly after 5 weeks of gains but prices remain supported as Asian buyers rushed to snatch bargains after better-than-expected U.S. jobs data helped prices fall nearly 2percent in the previous session, but the uncertain global economic outlook remains supportive of bullion.
The surprisingly strong U.S. labour market data on Friday boosted confidence in the recovery of the world's largest economy, lifting prices of shares and industrial metals while dampening hopes for fresh quantitative easing measures.
But traders and analysts said gold's outlook remains rosy as the uncertain global economic outlook will force central banks around the world keep their monetary policies accommodative. "The QE3 (third round of quantitative easing) is less likely after the jobs data, but the longer-term low interest rate outlook is still potentially supportive of gold," said Nick Trevethan, senior commodity strategist of ANZ in Singapore.In addition, bargain hunting from Asian buyers, especially from China, helped gold prices to rebound, traders said.
Greece is facing a deadline later today on whether to accept the painful terms of a new bailout to avoid a chaotic default. Technical analysis suggested that spot gold could rise to $1,742 an ounce, said Reuters market analyst Wang Tao.
Money managers, including hedge funds and other large speculators, increased their bullish bets in gold, silver and copper futures and options in the week of Jan. 31, as prices of all three metals rose to multi-month highs. Strong demand from China as well as India will likely continue buoying sentiment in bullion, said Trevethan of ANZ.
For more on gold and silver click on the links below;
(King World News: James Turk – Corrective Action in Gold is Prelude to Bullish Explosion.)
(Commodity Online: Gold prices may correct this week but trend remains up)
(Daily Reckoning: Buying gold in uncertain times)
(Gold and silver blog: Have gold investors become too bullish? ask the same question at $5,000)
Precious metals prices could retreat slightly this week following five weeks of gains, but overall market watchers said any correction by gold and silver this week should be light and short-lived, as the overall trend for remains higher. A short term correction in prices should be viewed as nothing more than a buying opportunity as upward momentum and bullish sentiment remains intact.
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