Metals become marionettes manipulated by the Dollar
The dollar index declined noticeably from last week's 82.20 to 81.15 which has been caused by rising confidence in European economies, as European leaders finally agreed on a bailout plan for Greece, attracting investments to the old continent. The greenback's fall is still felt today extending from the week's opening.
The dollar's retreat triggered a rise in oil, while commodities in general have gained where the S&P GSCI index had soared upward by 11.60 points to close at 524.58 points, as the RJ/CRB index was pulled up by 5.51 points and closed at 272.83 points.
Rising commodity prices tempt investors to enter the precious metals market; however the dollar is mostly the factor that holds precious market by its reins.
Yesterday, gold ended in NY higher by 0.21% to settle at 1109.00; silver's advance was much stronger with 2.85% ending at 17.35 and platinum was similar with 2.01% gain to close at 1627.00.
Low safe haven requests have kept gold from rising abruptly yesterday, as the new speculative and investment wave had entered the market raising precious metals to new altitudes. Positive performance from the main American and European indices had encouraged traders to invest in high yielding assets, with the precious metal receiving the bigger share. Meanwhile, gold was negatively affected by the data released from the United States.
The Core Personal Consumption index, which is the Feds favorite inflationary gauge, indicated that inflationary levels in the U.S. remain subdued. Personal income levels have declined ensuring that inflation will not expand out of hand, reviving once again deflationary fears in Japan. Gold becomes unattractive as a hedge during period of low inflation, which explains why the speculative spotlight was taken by silver and platinum where investor sought to indulge in speculative investments.
Gold and silver remained stable today around yesterday's closing levels, despite the continuing rise of stock indexes. Gold is trading at $1109.30 per ounce while silver remained unchanged from yesterday's closing at $17.35 per ounce at exactly 01:27 EST. Platinum held at high levels of $1624.00 per ounce, however failed to maintain an upward course and slipped 0.18% today.
The dollar is steering the markets amid speculative dominance in the market, as precious metals are expected to take the opposite direction of the greenback's movement. This sentiment in the market should be taken into consideration amid current market conditions and the drop of precious metal haven demand. Generally speaking, precious metals are expected to maintain the upward trend, although great fluctuations are foreseen due to the metals' bond with the dollar.