Precious Metals Decline amid High Profit-Taking
The U.S. dollar's exchange rate notably inclined throughout last Friday's Asian trading and today's session, this major incline versus other foreign currencies is still caused by the massive profit-taking occurring in financial markets on investments with a high yielding rate. However, U.S. stocks fell last Friday, as well as major European indices, where we also witness Asian stocks ending trading with a decline as well, in effect from the profit-taking being awaited by vital charts that are going to be released this week.
On the other hand, crude's price per barrel managed to sharply declined through the Friday's trading we had witnessed, where we witnessed levels above $72 per barrel; to settle today's trading at $65 per barrel. Also, what has been pointed out from numerous officials around the world is that crude's price is too high and might impede the spending improvement process, at a time the global economy has not shown any signs of recovery to return it back to its regular growth patterns for the five consecutive years ending on 2008.
The global economy achieved growth at the middle 4.6% for the five consecutive years ending on 2008. However, the global economy still suffers from the shadow of the worst credit crisis since the World War II, which had majorly damaged spending that is still affected by the increase of the unemployment rates. Despite of the stimulus plans and its success in dragging out the biggest economies out of a deep recession, while succeeding in some other economics towards growth, we still find that some economic sectors that correlated with spending still remain very weak.
Gold's ounce decreased in last Friday's trading to the amount of 0.30% and closed trading at levels 990.70; in New York, silver's closing price decreased 0.99% at level 16.04l; whereas, platinum witnessed the biggest declined recording 1.93%, to close trading at level $1273.00 per ounce.
Today's trading also marked negative bearish signs moving to the downside in precious metals. At the moment, at exactly 02:34 EST; we witness gold trading around level 988.30, decreasing its worth 0.24%; silver is trading at level 15.87, while it decreases 1.06%; finally, platinum entered a minor ascending correction, not being able to gain more than 0.31%, to trade it's price per ounce at the time at level $1277.00 per ounce.
The major inclined in the U.S. dollar's exchange rate versus the basket of foreign currencies, which had occurred to the crude's barrel price, had major effects on gold's price and other precious metals and their prices. The incline of the U.S. dollar's exchange rate alongside the declined of crude's barrel price, reduces the cost of storage, transportation, and creating precious metals; thus, directly decreasing the price alongside the crude's price decline, where the inclined of the U.S. dollar gives the possibility of inflation levels remaining low, impeding the precious metals' incline, especially gold, which is directly linked to inflation levels.
The decrease of precious metal prices was proof that traders and investors of the market price frequently existed within precious metal markets, at a time commodity indices declined around the world; thus, signaling that demand still remains weak around the world, where the global economy currently depends on stimulus plans, where it hadn’t proved its efficiency yet.
The S&P GSCI index declined 0.77 in last Friday's trading, completing the weekly decline journey, where it closed at level 440.92 points.
We still expect precious metal prices to inclined on the middle term, but on the short term, where trading this week can be seen as highly fluctuating with some declines that could be possible in the shadow of reaping the continuing profits in financial markets, while the dollar's exchange rate inclined. We shouldn't forget the importance of the economic charts awaited to be released this week.