The dollar fails to subdue precious metals
Greenback and oil move in opposite directions, as the dollar index surged northward for the second consecutive day to levels above 80.60 and oil plummets below the $85.00 mark. While precious metals were infiltrated by rapid fluctuations, though their general course remained positive.
Gold snatched a 0.35% gain closing at $1158.80 after trading in between $1149.60 and $1162.70. In London gold advanced from the AM fixing at $1151.25 to $1154.50 in the PM Fixing; underlining the heavy fluctuations that are affecting trading. Silver managed to reduce some of its losses surpassing $18.27, but closed with a rise from the fixing at $18.27 in London, at $18.40 per ounce. Platinum was also unable to gain much in London as it climbed $2 above its morning fix at $1716.00, closing in New York with a loss of 0.52% at $1719.00.
Gold was able to rise yesterday despite the constant appreciation of the dollar and falling oil prices. Today gold and silver have made a mutual downward movement as of 1:53 EST, as gold is trading at $1154.80 loosing all yesterday's gains while silver is down by 0.49% at $18.31. Platinum on the other hand was able to rise by 0.12% and is trading at $1712.00, making considerable effort to reclaim yesterday's losses.
Today's trading is making the same pattern as yesterday. On the weekly scale, gold is trading below opening levels of $1163.00, though the drop is considered mild when compared to the last week's closing at $1160.00. The same can be said for silver, which incurred slight losses over the week after it closed at $18.41.
Gold has been able to withstand the fluctuations that affected the dollar. Asian traders today are starting to feel anxiety amid fears of inflation flying out control, which would oblige central banks to take tightening measures, thus smothering the economic recovery. This was the main reason behind the sharp fall of Asian stock indices, where Nikkei dropped 1.53% and Hang Seng fell 1.3%.
The dollar's appreciation is eclipsing the demand for precious metal in the time of rising inflation. Though some demand for hedges is emerging with the fears of high inflation, while the demand for alternative investments have kept precious metals from falling victims to the greenbacks uphill surge.
Precious metals, especially gold, act as a cushion against inflation which we have reasonable reasons to believe will rise above accepted thresholds. Though, speculation that has become native in the precious metals market, will keep the market fluctuating severely.
In the week's final trading day, profit taking is causing stocks to decline. While the dollar is still rising as commodities plunge, this could disturb precious metals. Downward corrections are not excluded, though the general trend is still believed to be upward, underlining growing demand in the market that is keep the rising dollar effect under control.