Clearly the outlook for the currency markets, and in particular the U.S. dollar/euro exchange rate will be critical to the outlook for the gold market,

Sentiment towards bullion remains overwhelmingly bullish and further short-term gains are likely. A move up towards the February 1983 high of $509 an ounce seems the obvious target.

There has been little clear trend in precious metals prices in recent trading, with the markets recovering when they look the most bearish and stalling when they look the most bullish.

Although CFTC Commitments of Traders data showed a small fall in the total speculative long position, most holders seem to have been willing to stay with the market for the time being.

Certainly sentiment towards gold now remains positive, with the market ignoring the further drift lower in the oil price and the recent strength in the dollar,

rise in inflationary pressures caused by higher energy prices.