Gold stands firm while markets tumble
Stock markets continued plummeting yesterday, while the Nikkei index opened today with a sharp fall and closed with losses of 3.27%. The markets are infected with great doubts; firstly the anxiety around the Greek crisis and the possibility for the debt crisis to be spreading to other countries; and second is uncertainty around the pace of recovery of global economies especially after tighter monetary and fiscal measures adopted by the Chinese and other nations around the pacific.
Greenback climbed steeply yesterday, whereas oil moved in the opposite direction to drop below the $80.00 mark. These factors sent precious metals spiraling down as gold recorded a low of 1156.20 in New York trading. Commodity indices moved southward as well, where S&P GSCI lost 13.86 points and retreated to 521.81 while RJ/CRB shed 3.65 points and closed at 267.95.
The behavioral patterns throughout the markets can be interpreted as large scale profit-taking amid risk aversion, in the time when uncertainty lingers in the global economy. The wave of profit taking has swept through sell-offs to precious metal markets, as we see great depreciation of silver, platinum and gold. Gold, however, was able to redeem the losses incurred and closed with a rise in New York.
Silver recorded a low of 17.05 yesterday, before closing with a 2.02% loss at 17.50. Platinum dropped to lows of 1646.00 prior to closing at 1646.00 declining by 1.38%. Gold closed at 1175.60 rising 0.29%, after it sank to lows of 1156.20.
There is widespread demand on gold in Europe, due to several factor of which are the Greek crisis and falling currencies against the dollar, especially the euro. Demand includes that of a safe haven from the Greek crisis and dangers of a devaluating currency. Gold has thus been able to resist the pressures of the plummeting euro and the rising dollar.
A report from the International Monetary Fund (IMF) shows a decline in the gold reserves of the organization to 18.50 metric tons or the equivalent of a 595000 ounce decrease. This drop in reserves can be explained by the need of the IMF for liquidity to provided the much awaited aid package for Greece and other several countries. What's interesting is that the fall of reserves in March was due to selling operations, which despite of their immensity, were unable to pull the price of gold down or even stop its upward movement.
Euro's drop against other major currencies set the stage for a new record braking high for gold against the sixteen nation currency. Gold has reached the 919.687 euro mark, which is considered a new record, as investors surge for a safe haven from the Greek crisis and the euro's sharp fall.
At exactly 2:51am EST, gold has fallen slightly against the dollar and is trading at 1173.10 or down by 0.21%, though the metal hasn't lost its appeal and has climbed to level higher than yesterday's at 1177.50 in the electronic trading.
Silver continued its retreat, as today it fell by 0.74% and is trading at 17.37, while platinum managed to redeem some of the losses it suffered yesterday and is currently trading at 1655.00 with a rise of 0.55%. Platinum's rise was nothing more than speculation on the losses the metal is suffering.
More corrective waves could be seen today, ensued by profit-taking. In general though, gold has proved its toughness and is trending upward. Other metals will trade with turbulence due to their strong ties with the status of the economy and financial markets.