Gold's Shine saves it from Plummeting!
Precious metal markets seem to be shaking off speculators in the market, where they have, and are still, causing volatile fluctuations in precious metals. Meanwhile, main stock indices' mixed performance yesterday and decline today in Asia, had a negative effect on traders that are waiting for the release of U.S. fundamentals; where some data pointed out that the housing sector could have indeed started recovering, despite of numerous sides signaling a possible fall in home prices between 5% and 10% until mid-2010.
On the other hand, numerous traders are currently awaiting the release of more economic data, as the housing and real-estate markets are the root of the credit crisis, where it had started stabilizing and therefore signaling that the worst credit crisis, the worst since the Great Depression, has started to wane.
The optimism overshadowing financial markets is not enough to attract investors towards commodities, assets and stocks; where they are presently waiting for the advanced GDP, which will be issued by the U.S. tomorrow. This comes at the same time where some steel companies are releasing their corporate earnings; showing a decline in profits and losses, companies such as US Steel announcing its losses for the third consecutive quarter, which contributes to the continuing fragility the U.S. construction sector is witnessing and thus keeps traders on their toes from this week's assessment of how far the market price of market shares are from their fair price.
Fundamentals released by the U.S. showed a continuing fragile market, where consumer confidence fell by 1.5%, which was a reason behind some people seeing this as a weakness in the future consumer market at a time unemployment levels rose by 9.8%, alongside the elevating credit difficulties; compared to what it was before the credit crisis.
All these causes combined caused a surge in speculative liquidity in precious metal markets due to the fall in silver yesterday, where it closed low at 16.69 by 2.17% in NY; platinum followed and fell by 1.35% closing at 1313.00, losing a whole $18 due to a profit-taking session throughout short selling financial centers for future contracts on silver and platinum, which continued after confidence data was issued from the U.S. yesterday.
Yesterday's trading session seemed quite interesting for gold, where it managed to close higher in NY by 0.15% at 1039.60; to lose some of the buying saturation at the top it had recorded during the previous days. Thus, we see long term financial positions overshadowing the gold market alongside portfolio managers buying gold as a safe haven and alternative investment, due to the unstable situation in the global economy. Even though the global economy seems to be exiting the recession, the recovery pace still remains very weak compared to its previous years starting from 2003 to 2006; stirring up controversy between traders, investors, portfolio managers and banks, thus causing speculator to exit for any reason and entrance of safe haven demanders.
The dollar rose yesterday and was accompanied by crude's gain, but we overall see a major spike for the dollar against a basket of major currencies, yet the yen was able to achieve the most obvious gains today over the dollar. The dollar's incline encouraged speculators to go short on future contacts, alongside the profit-taking through previous long positions.
Today, crude witnessed a fall, slightly affecting gold by declining 0.08% to trade at 1038.80 precisely at 02:34 EST; silver also fell 0.18% and is trading at $16.66 per ounce; whereas platinum was able to compensate $6 from the amount it lost yesterday, where it traded at 1319.00. Gold's overall trading, whether yesterday or today, still remains positive as it is resisting circumstances that may cause it to fall due to the dollar's spike and plummet of crude, alongside liquidity exiting financial markets. All these facts contributed in stabilizing gold's yellow shine, where it was able to attract numerous sides as a safe haven when times get hard!
What happened yesterday and today; proves that precious metals are attempting to get rid of liquidity, which is heavily fluctuating and therefore making us not rule out bearish corrections and volatile fluctuations occurring. However, this ensures to us that precious metals on the medium term are a good candidate for more spikes, as long as its shine maintains its appeal.