The yellow metal searches for a direction

Its official. It is no more the dollar index alone that decides the fate of the yellow metals prices. The precious metal seems to be wandering around in search of a direction but the short journey so far has been futile as gold has been found moving with high volatility in a wide range of $1153/ounce to $ 1058/ounce, since the year began.
What has made the yellow metal so volatile is that now many other factors, in addition to dollar index, have become instrumental in shaping the gold price.
But the greenback still remains the single largest factor in influencing the value of gold. However, investors recent lack of faith in worlds leading currencies, euro and pound, coupled with the increasing fear of inflation in China have prompted the investors to weigh these factors as well. The shift in investors thinking while seeking gold has forced the prices move both ways.
There has been a lot of love lost between the investors and the two leading currencies lately. The debt woes in the Euro Zone, which have historically dented the gold prices a fair bit on the back of a strong dollar against euro, have made a sudden U-turn. A similar scenario is now supporting the gold prices, which clearly reflects the shattered investors confidence in the currencies.
Speculation has now a big role to play in the gold pricing game as the fear that the European establishment might use their vast gold reserves to assist debt laden euro zone economies has had a daunting affect on the metal price.
China cannot be kept out of global events of such importance as the Asian giants inflation is at a 16-month high, which has reduced the appetite for gold as the fears of an interest rate hike gain substance.
The confluence of so many factors has made the prediction of the gold price tougher than ever before - let alone the direction. But, greater weight of factors underpinning metal prices will outweigh the impact of speculative factors in the short term and will keep the prices largely range bound - unless of course, all of a sudden the fiscal incidents turn these speculations into reality.