Oil N' Gold Focus: Gold Price Takes A Breath After Strong Rally, Outlook Remains Positve

Gold price for April delivery extends yesterday's rally and surges to as high as 967.8. Although currently retreated to 955, rising inflation worries and depreciation in the dollar will support price. Holdings in the SPDR Gold Trust soared 1.7% to a record of 1103.29 metric tons yesterday as investors parked their money to gold as a store of value and a hedge for inflation.

The precious metals' pullback in European morning is both driven by profit-taking and mild recovery of the dollar. The dollar index bounces back to above 83 after plummeting to 2 months' low of 82.63. Against the euro, the greenback rebounds to 1.358 after losing 9% over the past 9 days (euro strength was first led by SNB's explicit currency intervention and then intensified by the Fed's debt- buying program). However, commodity currencies remain strong with AUD rising to 0.6891 and NZD to 0.5575 on rises in commodity prices.

Crude edges further higher to 52.34 today and remains firm. Short term outlook will remain bullish as long as 46.92 and further rally is still expected. As discussed before, sustained trading above 50.47 key resistance will pave the way for strong rally towards next key level of 60, which is close to 23.6% retracement of 147.27 to 33.5 at 60.34. On the downside, though, below 46.92 will indicate that rise from 33.55 has completed and will turn intraday outlook neutral first.