21 Mar 2014 Last updated at 13:37:10 GMT

LONDON (Scrap Monster): Gold prices rallied overnight to touch $1340 per ounce lunchtime Friday in London, heading for their first weekly loss since January.

World equities, commodities and bonds also steadied after their mid-week drop following the US Federal Reserve's revised Wednesday outlook on interest rates.

The price of wholesale silver bullion bars mapped and extended the move in gold prices, bouncing 1.4% from Thursday's new 3-week low.

Losing 3.3% against the Dollar from last Friday's finish, gold prices fell less steeply across the week for UK, Eurozone and other non-US investors.

"This week's decline [in gold prices] is viewed as a correction within a bullish trend," says Swiss investment and bullion bank UBS, "with strong support offered by the trendline connecting the December/January lows, which intersects today at $1323.95."

"After several days of selling," agrees US brokerage INTL FCStone, "some support seems to be emerging.

"But it is too early to say for sure," the note continues, pointing to "the bearish undertow" following this week's revised interest-rate outlook from the US Federal Reserve.

Lone dissenter, the Minneapolis Fed's president Narayana Kocherlakota today issued a statement challenging this week's decision – a highly unusual step over what he calls an "unusually significant" policy statement.

Widely seen forecasting a rate-rise sooner in 2015, "The FOMC's new forward guidance does not communicate purposeful steps [for a] rapid increase of inflation," says Kocherlakota.

"[This] weakens the credibility of the Committee’s inflation target, by suggesting that [it] views persistently sub-2-percent inflation as an acceptable outcome."

"With tapering of the Fed's QE now underway," says a note from London bullion market-maker and US investment bank Goldman Sachs, "US economic releases are back to being a key driving force behind gold prices.

"It would require a significant sustained slowdown in US growth for us to revisit our expectation for lower US gold prices over the next two years," says Goldman, repeating its end-2014 forecast of $1050 per ounce and saying the recent rally has outpaced the drop in real US interest rates.

"[This] key input into our forecasts and benchmarking of gold prices [suggests] potential for a meaningful decline."

Shorter term, "The market is concerned about the development in Russia," reckons Bernard Sin at Swiss refiners MKS, speaking to Bloomberg.

"There is a lot of uncertainty ahead. Gold will be a store of value."

Ukraine's interim prime minister Yatsenyuk today signed the European Union deal over trade and political support which former PM Yanukovych abandoned in November, sparking protests which led to pitched battles in Maidan Square and then his flight to Moscow last month.

Russia's President Putin meantime signed a treaty annexing the former Ukrainian territory of Crimea.

Russian equities dropped another 2.5% on Friday, up on the week in Rouble terms but nearly 15% down from a month ago.

Courtesy: www.bullionvault.com

Author: Paul Ploumis