Selling waves continue to dominate precious metals
The sharp bearish waves continued to be seen in precious metals' market, including gold and platinum, due to aroused fears in financial markets over the global economy's competence, alongside Moody's signaling that debt rating for the U.S. and UK is not protected against reduction from the current top Aaa rating!
From here a major dollar buy-back wave was seen due to a wide range of profit-taking in financial markets around the world, which were in a form of selling high-yielding assets and purchasing the dollar; thus, we witnessed a major rise in the dollar's exchange rate, where it took the U.S. index yesterday towards 76.27.
Crude also fell below $73.00, where commodity indices followed and dropped; the S&P GSCI index, that was beat by energy commodities, dropped 4.06 to close trading at 495.94 in New York; the RJ/CRB index fell by 2.28 and closed trades at 271.90, clearly affected by precious metals.
In addition, stock indices around the world also depreciated due to profit-taking and risk aversion, which also provided a major push for the dollar alongside the Japanese Yen; main stock indices in the U.S. fell yesterday, at a time the Dow Jones Industrial Average plunged 1.00%; and today Asian stocks fell as well. Current fears clearly reflect that the global economy's improvement could be below expectations, where recovery could take more time, even with the possibility of the global economy exiting the recession, things will not return to normal and may take longer than previously anticipated.
Gold sharply fell throughout yesterday's session to close at 1228.30 in New York; while silver severely dropped by 3.47% at $17.54 per ounce; whereas platinum closed yesterday at 1411.00 dropping by 1.95%.
As for today, precious metals are trading in bullish corrections, where low metal prices are attracting some speculative demand inline with demand by jewelers; thus, pushing minor demand today throughout the Asian session and therefore pressing gold towards $1131.10 per ounce; while silver rose 17.58. As of 02:29 EST.
Meanwhile, platinum is still witnessing negative pressures today, where worries are set around the recovery's competence in the global economy, next to the drop of speculative demand on it and thus keeping it at low levels; where it is presently trading at $1408.00 per ounce.
The volatile fluctuations seen in financial markets and fears of what's coming next has returned to dominate traders in financial markets, causing major selling on high yielding assets and headings towards the more liquid currencies known as the U.S. dollar and then Japanese Yen. Despite of the metals' bearishness, the medium term trend remains bullish, gold could face more drops due to the selling waves that have spread throughout financial markets. Meanwhile, both silver and platinum will face negative pressures and major selling until the end of the panic wave in financial markets.