Mixed Start for Precious Metals This Week

Precious metals kicked off trading this week with mixed trading; metals are stabilizing near their highest levels achieved last week. As of 02:28 EST today, gold is trading at $1048.00 per ounce, with a slight dip from New York's closing last Friday; whereas, silver is trading slightly higher at 17.74; as for platinum, it followed gold’s lead and is currently leaning towards the downside at $1331.00 per ounce.

Last Friday, gold managed to end down by 0.57% to close trading at 1048.00; whereas silver fell to 0.45% to close at $17.70 per ounce; while platinum fell 0.89% and closed at $1333.00 per ounce.

On the other hand, crude managed to gain last Friday rising above $72.00 per barrel; whereas the dollar appreciated against a basket of major currencies. This is causing the mixed trading sentiment despite prevailing circumstances that should’ve allowed precious metals to continue rising. The dollar's rise blunted the effect of crude's strength; thus, causing a very mixed trading session for precious metals.

In addition to that, main commodity indices plummeted on Friday; where the S&P GSCI index fell by 0.30 to close at 472.22 points; whereas the RJ/CRB COMMODITY declined by 1.36 to close at 262.55 points. The fall of commodity indices was accompanied by positive trading in stock markets, thereby leading investors to head to stock markets and leaving numerous commodity markets, such as precious metals.

Presently, investors are anxiously waiting for the results for the major corporate earnings. However, investors are jittery and woes remain dominant that the recent seen rally in stocks and commodities were more rapid and preceded the global economy's improvement. Nonetheless, the earnings to be released could be an assurance of how much the economy really improved; which is why volatility persists and may lead to mixed trading for precious metals with the beginning of the week.

Expectations are still for heightened volatility over intraday and short term basis, with the possibility for further bearish correctional moves. Inflation in major countries still remains very low adding to worries in the market which comes alongside the mixed dollar, which may cause major confusion over short term. On the other hand, the medium term outlook has not switched its direction; even economic fundamentals reflect further gains to be seen for precious metals.

Between expectations for rising inflation over the long term and more improvement in the global economy, including demand on precious metals over the medium term, precious metals will continue to surg. However, the recovery in the global economy could be slow, where high uncertainty and risk are still evident as the recession and the crisis are not fully over.

Whether the recession and the credit crisis persist, or the global economy continues its recovery, both scenarios support stability for precious metals over the medium term. Those expectations will prevail as long as interest rates remain low across global central banks, alongside quantitative easing policies that may cause a serious threat on currencies purchasing power over the medium term, which are similar to inflationary effects even if inflationary pressures remain subdued.