The Dollar's Spike Forces Metals to Fall
Precious metals fell noticeably throughout yesterday's trading session, where a plummet overshadowed metals. However, the major spike the dollar managed to achieve caused a major profit-taking wave on gold; where the major gain the dollar recorded caused slowing liquidity inflow for safe haven demand. The dollar's appreciation will surely suppress inflationary pressures, where that was accompanied yesterday with the drop in oil and commodities; the S&P GSCI index fell by 12.61 to close at 498.34; whereas crude also fell to levels below $78 per barrel. All this was followed by the spike witnessed in the U.S. dollar index extended the gains trading above 76.00, rising from the bottom set last week at 74.91.
However, yesterday we witnessed platinum fall and close at 1305.00 per ounce, falling from 1325.00 about 0.61%; gold also closed at 1027.70, losing 1.14% yesterday; whereas silver declined by 3.36% to close at 16.13 in NY, nearing its lowest at $16.10 per ounce.
Yesterday, sliver's slump extended beyond gold and platinum, as we know silver is affected by investors in the market; where a sign for profit-taking is available investors tend to rush towards it. Also, silver rose today surpassing platinum and gold by 0.68% by trading at $16.24 per ounce precisely at 02:50 EST, proving the speculative rush.
Platinum also rose to $1311.00 per ounce, rising by 0.46%; whereas gold rose by 0.39% to trade at 1031.70; affirming that market speculations on gold is less than demand on it as a safe haven.
Meanwhile, the dollar still acquires the bullish rush versus other currencies, yet precious metals managed to ignore the dollar's strength. Crude on the other hand continues to plummet and trade at $77 per barrel. Thus, we can see that the rise overshadowing precious metals today was not because of have demands against inflation, at a time future commodity contracts continue to fall, but more about liquidity entering precious metal markets amidst a state of confusion about the competence of the global economy and how much improvement is actually taking place.
On the other hand, Asian stock indices ended with losses trailing U.S. and European equity losses yesterday. The major exit of liquidity from stock markets sure needs a new market. Presently, we are waiting for the release of the U.S. GDP today, thereby making traders demand precious metals as a hedge against any future uncertainty as today's data will be the final straw to either berate the ongoing sell-off or fuel woes over the outlook.
For today we expect high fluctuations in precious metals, where the dollar would be dominant over the metals; however, we should pay attention to the data being released today, where it could have a major effect on intraday moves, according to the way markets will perceive today's figures; the data will either have a positive or negative effect, yet on the other hand our medium term expectations remain bullish.