The dollar rage triumphs metals in the second round
The dollar continued its advance today after the gains it gathered on Friday against most actively traded currencies. A new storm of pessimism and woes dominated financial markets over the Greek debt crisis which is not finding its silver lining; the fears coupled with a new wave of skepticism over the outlook for growth on the back of stimulus withdrawal and monetary tightening after late Friday's move by India to raise rates.
Profit taking waves have pushed investors towards greenback, which is on the rise today pressuring dollar denominated assets to decline as we see crude on the slide. Speculators also started profit taking across metals as they failed to restrain the raging dollar.
Gold ended in NY last week down 1.6% to settle at 1107.90. Silver declined more aggressively by 2.47% to end at 16.96 while platinum fell 1.41% to end at 1605.00. Commodity indices also ended in the red last Friday, where the S&P GSCI ended down by 7.88 points.
Today, the dollar is still on the rise and the decline is still seen across equities and commodities which also included precious metals to extend their decline. As for 03:30 EST gold was trading down by 0.13% at 1106.50 and silver was trading around 16.91 down by 0.29%; as for platinum it was off the most by 1.00% at 1589.00.
The tension in the United States over Obama's health plan, fear over the outlook for the euro on the back of the Greece budget crisis, and the wave of tightening from Asia led by China and India all are pressuring investors into profit taking as the volatility extends further and the outlook grows with further uncertainty all benefiting the dollar.
Trading this week for precious metals is likely to be very volatile with downside bias, despite that we see the upside trend is still valid for gold and other metals over the medium term; nonetheless, the short term volatility is warranted amid the ongoing uncertainty over the outlook for the global economy.