Precious Metal Prices Fall Sharply
Precious metals fell notably in yesterday's trading session, affected by the dollar's strength against a basket of foreign currencies. On the other hand, we saw crude fall, pushing traders to profit-take within precious metal markets and therefore causing a noticeable decline for the majority of them. Meanwhile, stock indices plummeted throughout trades in Europe and U.S, where Asian stocks followed by falling as well.
Fears overshadowing the financial markets in the past two days pushed main stock indices around the world to fall, where we also witnessed U.S. stocks slip due to talks of ending the home buyer tax credit program and terminating tax cuts on real estate loans; the S&P GSCI index declined by 10.44 to close at 508.84 in NY; the DOW Jones index also fell 1.05%; while the German DAX index fell as well by 1.071% yesterday; whereas Japan's Nikkei index followed the rest and declined 1.37% today.
Gold recorded its lowest at 1036.70 in yesterday's trading session, closing at 1038.00 by a drop of 1.59% in NY; platinum also fell, where it closed at 1331.00 lower by 2.06%; whereas silver still suffers the most from volatility in liquidity, causing it to sharply plummet and lose 3.40% yesterday, where it closed at $17.06 per ounce in NY.
Once again, volatility in liquidity is being witnessed in precious metals; where silver, which stands out due to its high liquidity levels caused by speculations, is facing high fluctuation surpassing platinum and gold; whereas gold was seen to be less affected by it, since there are groups of investors still using gold as a safe haven against uncertainty of the global economic outlook over its ability to completely elude the credit crisis.
Today, we witnessed minor bullish corrections on precious metals; where gold is trading at 1042.00 precisely at 02:19 am in NY; meanwhile, silver traded at 17.18; whereas platinum was seen slightly rising to trade at $1334.00 per ounce.
Presently, precious metals are being affected by extremely mixed opinions triggering a profit-taking wave by numerous speculators and investors throughout the market. However, the dollar managed to rise and therefore causing crude to plummet, which was the reason that made many traders attempt to profit-take on precious metals, as well as stock markets and other commodities.
Positive signs seem to be emerging for the global economy, where it seems to be showing recovery and growth signs. At the same time, we see that traders are jittery about the consequences of cutting back on governmental stimulus, monetary and financial plans for major economies; where they seem to be showing more improvement due to the provided measures. Many traders and analysts are convinced that international central bank's financial and monetary policies are going to be the ones carrying out the global economy from the recession, even though, major current fears are set on the effects of stimulus measures withdrawal and fears of a new shake to an already fragile financial market and economy.
The liquidity and demand from speculators cannot be taken lightly, where it can cause high fluctuations throughout financial and precious metal markets. However, at the same time we see that other group of traders are buying precious metals as a safe haven, keeping the medium and long term direction to the upside, but over the intraday and short term we won't rule out more bearish correction in light of vital economic data due to be released this week.