Some weakening in the pound is likely to be needed in the future to shrink the U.K.'s current account deficit, the Bank of England's Monetary Policy Committee said yesterday."At that point, in order to shift resources from the non-tradable sector of the economy into the internationally tradable part, some depreciation of the real effective exchange rate will probably be necessary," it said. The bank of England is taking cues from the Japanese counter part to ensure higher growth without raising interest rates and using the currency markets for growth.There could be a tussle if other central banks resort to weakness of their currencies to achieve growth targets. London is big mover in gold and silver market. The underlying trend of the US dollar is weaker. A weaker sterling will reduce the arbitraging done in UK and less volatile movement ingold and silver.
Gold and silver are consolidating at the moment, waiting for a technical direction. The US dollar is weaker against the major currencies as markets wait for the bank of Japan interest rate decision tomorrow. Traders are on the edge waiting for a break out.
GOLD -- APRIL FUTURE
Gold needs to break $680 for $690, $703. On the lower side $663.50 and $659.80 is the key support.
SILVER -- MARCH FUTURE
Silver needs to break $1437 for $1500. On the lower side $1382 and $1350 are the initial support levels with $1330 as the key support.
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