Gold's Independence from Financial Markets
Gold continued its rise throughout last Friday's trading session at the time silver slightly dropped; whereas platinum also followed and recorded a slight rise. However, gold didn't respond to crude's drop; the S&P GSCI index fell by 1.99 points and continued to rise throughout last Friday's trading session, where it also resisted the dollar's spike against a basket of foreign currencies. Meanwhile, U.S. index rose last Friday from 75.26 to achieve its highest at 75.84 points, despite of this, we witnessed constant liquidity rushing in gold's direction.
In addition, gold managed to rise in New York by the end of last week to reach 1152.10 before slightly falling to close at 1150.90 gaining 0.55%; whereas silver fell and closed at 18.51 depreciating by 0.16%; platinum, on the other hand, set a slight gain and closed at 1445.00 rising by 0.14%.
Meanwhile, European stock indices strongly fell by the end of last week's trading session; where we also saw a drop in U.S. stock indices following major fluctuations. The strong volatility and the drop in equity markets; caused liquidity to head towards precious metals as a safe haven. Heading towards the currently holds higher risk, since the dollar is expected to fall over medium term basis; thus, pressing traders to head towards precious metals, specifically gold.
The spike gold and silver witnessed throughout Friday's trading session, influenced the RJ/CRB COMMODITY index to rise by 0.31 points, opposed to against other commodity indices' direction, since from what it seems to appear, precious metals are trading independently from other markets; where the tie between the dollar with precious metals, alongside the tie between crude's overall performance has become weaker, especially since traders head to gold as a safe haven against the hazy conditions of the current global economy's situation, thus causing us to reevaluate the spike by equities, commodities and other metals, where it seems that gold is profiting from this current situation.
The dollar's drop today, alongside crude's spike; caused speculative liquidity to head towards precious metals, in conjunction with pushing investment liquidity into the market as well. Consequently, prolonging gains on precious metals throughout the Asian session and the beginning of the European session.
Today, gold is trading with gains by 1.31% at 1166.00 (precisely at 02:22 EST), recording new all time highs; meanwhile, silver rose by 1.51% to trade at 18.79; whereas platinum gained $20 to trade at $1465.00 per ounce.
On the other hand, new fears are arising over the prospects for the world's leading economies, especially China, where they are feared to fall into a bubble similar to Japan's bubble seen back in the 80's, due to major economic stimulus policies alongside the fragility of major global economies, despite the possibility for them to exit the technical recession. These reasons pushed traders to purchase gold, which still maintains its shine, while attracting numerous sides despite of its high prices.
As for today's agenda; vital data will be released from numerous economies around the world. Starting from the U.S. we await the release of the U.S. housing data; whereas from Canada, we await the release of market spending and retail sales data; from Europe, PMI data for the services sector and the composite index, could cause volatile trading in precious metal markets. Meanwhile, precious metals have become more connected to major global economies in an intricate way, but at the end we see that all economic expectations still favor more gains for gold over the medium term.