New beginnings for gold following Friday's slump
Throughout last Friday's trading session; alongside news about Dubai's default woes as speculations were over its inability to pay back its debts, after Dubai World rescheduled its debt payments. Thus, we witnessed a drop in commodity and equity indices, as well as majors' slump versus the yen and the dollar.
Meanwhile, the S&P GSCI index fell by 8.07 points to 506.67 in New York, marking its lowest at 490.23 points. This drop was led by the plummet in energy commodities, where crude tops the list and is trading below $73 per barrel for the first time since October 12, 2009; where we witnessed a major spike in dollar's exchange rate, prompting a huge wave of sales on precious metals that made the RJ/CRB COMMODITY index drop to close at 273.09 points.
The dollar rose throughout last Friday's trading session; reaching 75.54 before presently returning to sharply fall against a basket of foreign currencies. Today, we also see that crude returned to spike towards $76 per barrel, returning back to normal as if nothing had occurred last Friday, where it included today's rise in Asian stock indices that plummeted last Friday, where indices made-up for most of their losses.
Today, we also witnessed precious metal prices stabilizing after rising following their plummet last Friday; gold managed to sharply drop towards 1136.40 before rebounding to close at 1176.70, where we currently see gold trading above $1170.00 per ounce. Also, silver and platinum followed but faced a steep drop throughout last Friday's trading session; meanwhile, today we see that platinum returned to positively trade at $1449.00 per ounce gaining by $12.50 per ounce, precisely at 03:02 EST.
In addition, the dollar's drop by 0.5% against a basket of major currencies followed the rise acquired on Friday; stimulating precious metals to continue appreciating. However, we notice something quite odd occurring throughout London trades last Friday; gold dropped to close at 1104.00, which was due to expectations for the metal to continue dropping. Conversely, today we see that the metal still maintains trading above $1170.00.
This week could be a new beginning for gold and other precious metals, where we still see that the medium term trend is still bullish flagging more gains to be seen; however, we are presently witnessing heavy fluctuations that we don't rule out their prevalence over the upcoming period, with bearish corrections that might be volatile every once in a while. Overall, we hold our expectations for gold to continue surging above $1200.00 per ounce.