U.S. data powers demand for precious metals!
U.S. data released yesterday, pointing that the largest economy in the world has started to show signs of recovery that surpassed previous expectations. Although the U.S. economy is moving further away from the recession and achieving growth, this does not negate the fact that the road to recovery for the economy still remains far, even though data yesterday pointed out for strong growth in the manufacturing sector, with an unexpected rise in pending home sales. All this positive data was the reason behind pushing traders to expect more demand on commodities and services, causing an overall commodity demand wave, where precious metals gained a part of it as well.
Gold gained in yesterday's trading session, where it closed at 1059.60 gaining 1.43%; silver rose by 0.80% and closed at 16.45; whereas platinum witnessed a gain of $11 per ounce, where it closed at 1335.00 rising by 0.83%. Gold ended in London higher than from New York's closing, where the metal closed at 1062.00 rising from its opening levels of $1052.00 per ounce.
The growth spurt U.S. equity indices yesterday and also included commodity markets; the DJIA closed at 9789.44, gaining 0.79% due to major demand flowing towards financial markets caused by high confidence levels from U.S. fundamentals. Meanwhile, commodity indices surged, thus showing that most commodities around the world had spiked; the S&P GSCI index rose by 6.82 to close above 500 at 503.63 points, slightly nearing the high achieved at 505.15 points.
Today's focus was set on the major plunge Hang Seng Index faced, despite of some Asian stock indices also falling; whereas precious metals continued to gain due to demand every once in a while from numerous speculators and investors. However, gold managed to rise today once again, where it is currently trading at a clear high precisely at 02:35 EST; meanwhile silver rose and is trading at 16.53, inclining by 0.49%; platinum followed by gaining, reaching $1343.00 per ounce.
However, yesterday's trading session witnessed gold gaining more than any other precious metal, thus showing us that there are strong speculations mixed with investments in the market that came alongside demand for a safe haven due to the volatile fluctuations markets are facing. The major fluctuation being witnessed, alongside the instability of the dollar is causing demand on gold as a safe haven; where Australia raised its benchmark interest rate to 3.5%, causing more demand on gold as the Australian dollar is enjoying a higher return, which in its turn is attracting investors to buy gold due to request for the Australian dollar, and selling low yielding currencies.
We see that precious metals insist on moving upwards, where the upside medium term direction is bullish, specifically on gold, as prices are seen above $1100 per ounce; whereas the short term and intraday direction may both witness major fluctuations if speculations remain strong in financial markets.