Gold sentiment is turning positive as investors are more concerned about sluggish US growth, spreading impact of sub-prime housing woes, which could weigh on dollar.
The euro briefly struck a record pinnacle against the dollar early on Wednesday amid US housing market concerns and the prospect of rising interest rates in the eurozone. The European single currency touched $1.3787 in early deals -- which was an all-time record high point The dollar's recent weakness has also been stimulated by expectations that the US Federal Reserve will hold interest rates steady in the near future while European central banks tighten monetary policy.
The pound leapt to another 26-year peak at $2.0316 as the British currency was also buoyed by the outlook for higher borrowing costs in the coming months. The pound is being supported by healthy interest rate differentials and the very real possibility that UK interest rates will rise further still before the end of the year.
The Bank of England has hiked British interest rates five times since August 2006 to the current level of 5.75 per cent. Elsewhere, the Bank of Japan started a two-day policy meeting Wednesday with markets on expectations of an interest rate hike in August or September and no change this month from the current level of 0.50 percent.
Crude oil had gained along with gasoline, which rose 5.4 percent in the past five trading days on reports BP Plc had closed units at its refinery in Whiting, Indiana, and refiners in Texas and Kansas halted units as well.
As Bullion have positive correlation with Crude Oil and negative correction with dollar, gold and silver are expected to rise amidst hedge against inflation. I expect gold to touch $680 and silver to touch $14 at COMEX within few days.
