Cross Currency Table – (Bloomberg)

Gold hovering near $1,601/oz today, as market digests data about a possible global recovery occurring which is sending investors to riskier assets. German business sentiment hit its greatest level in 3 years adding to the optimism.

The yellow metal is being bolstered by Asian bargain hunters and prices usually fall off when their markets close.

Shanghai Gold Exchange most active futures and spot gold contracts fell to their lowest levels in 7 months.

Chartists note the "death cross" formation on the spot gold chart, where the 50-day moving average is dropping below its 200-day moving average, which hints that a pullback could be on the way.

The RSI or Relative Strength Index which has fallen below 30 since late last week shows that the market has been oversold.

Investors will examine the wording in the minutes of the U.S. Federal Reserve's latest policy meeting, due at 1900 GMT.

Gold Spot $/oz, 23FEB11-20FEB13 – (Bloomberg)

James Steel, HSBC analyst, talks about the outlook for gold and silver markets. He speaks with Sara Eisen, Alix Steel and Adam Johnson of Bloomberg and recently just revised his silver forecast.

James Steel, HSBC analyst (USA Inc) interviewed by Bloomberg

Alix Steel : What triggered the steep decline on Friday, February 15th? You had Ben Bernanke and G20 saying the global economy was improving. China was out of the market for the Lunar New Year holiday. Plus, major fund holder George Soros was dumping his position in GLD. Did that create a sentiment shift out of gold for momentum players?

Jim Steel:  What you've seen this year longer term are the following:

3 Key Items taken out of the picture  
1. Disruption of the fiscal cliff.
2. Hard landing in China has not materialized, outlook is better there.
3. Withdrawal of Greece from EU.

These key items all helped support the gold market. However, these risks have diminished. Therefore, gold is a barometer of geo political & economic events.

Alix Steel: Were this long term or short term investors (referring to the Friday)?

Jim Steel: Short term in duration. If you look at the COMEX over last 12 years not any one week has any of the major funds not owned gold, they have only reduced their positions.

Alix Steel: Why would anyone want to own gold? It’s a safe haven during times of crisis and things are getting better, and it doesn't pay a dividend and George Soros is selling 100 million of his gold holdings.

Jim Steel: Well you don't get much of a yield on most things. Negative real interest rates is supportive of gold bullion going forward  and also there is still uncertainty in the currency markets and gold is an alternative form of currency.

Alix Steel: We haven't really seen a lift from the currency wars rhetoric?

Jim Steel: Still its within a broad range that the bull market is still intact. Don't forget it was only a few years ago when Obama took office and gold was around $900/oz.

Adam Johnson: Silver and palladium why not buy them?

Jim Steel: We're moderately bullish on all the precious metals. We adjusted our silver forecast up to $33/oz from $32/oz for this year based on electronic strength in that space as 1/2 of it goes to industrial applications.

Adam Johnson: What are precious metals correlating to?

Jim Steel: That's what makes gold interesting, the Dunbar quant team in London have researched that gold is uncorrelated for risk on and risk off assets. It is precisely that which makes it interesting to portfolio managers.

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NEWS
Gold inches higher ahead of Fed minutes – Market Watch

Gold hovers around 6-month lows, economic recovery hopes weigh - Reuters

Gold could extend losses on looming 'death cross' - Reuters

Traders rush to buy gold ahead of budget - Reuters

COMMENTARY
Video: Gold Bull Market `Still Intact,' HSBC's Steel Says - Bloomberg

Gold prices ready for a surge – Radio The Voice of Russia

When It Comes to Gold, Stick to the Facts - GoldSeek

Embrace Silver's Volatility All the Way to the Bank – Casey Research

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-- Posted Wednesday, 20 February 2013 | Digg This Article