Metals fluctuate amid haven and speculative demand!
European deficit woes have once again stained expectations, as pessimism returns to the market. The spreading of the Greek epidemic and fear over other countries' futility to put a leash on their deficits, have created strain on the single European model, causing the euro to fall heavily yesterday and extending into this morning.
Demand on American Treasury Bills has been noticeable, as even other countries purchase American government bonds, while on the other side of the Atlantic, demand on European bonds has been dry due to the high risk premiums demanded, as credit default swaps have rise to all time highs.
Precious metals are back to serve as a safe haven, especially in Asian countries where tension is mounting in the Korean peninsula. Though major economies are likely not to enter the recession once more, still the state of the global economy is vague with signs of slowdown in the recovery starting to appear, reflected by week performance of varied sectors when compared to the first quarter.
The tendencies were clear towards precious metals yesterday due to lack of confidence in other markets. Precious metals were especially lucrative after the huge losses they have suffered in the last period, attracting investors that seek a safe haven and alternative investments, as stock indices experienced a sharp fall yesterday.
Gold gained 1.30% in New York settling at 1192.30, after recording a high of 1198.00. Silver ascended 1.42% to a closing 17.89 after reaching a high of 19.09, while platinum had risen 1.46% and closed at 1527.00. Platinum on the other hand is under great pressure due to the uncertainty of growth in the industrial sector, as the metal remains in its lowest levels after falling below $1750 per ounce. Today, the ailing industrial sector also cast its shadows on platinum, as the metal made a big dive to 1500.00.
As of 02:28 EST, gold is trading at 1188.60 down 0.31%, while silver is suffering even heavier losses of 1.34% and is trading at 17.65. Platinum slumped 2.10% to 1495.00.
After scrutinizing current prices, we conclude that gold has suffered the least losses. This can be explained by demand for a safe haven amid speculations on price and profit-taking on alternative investments.
Commodities attained gains yesterday as the S&P GSCI added 0.04 points to close at 473.79. Today, however, several commodities have declined and among them oil, which is currently trading at $68.00 per barrel. The dollar has appreciated while the euro has moved in the opposite direction; meanwhile, oil has put pressure on precious metals. Gold has, nonetheless, been the least effected due to safe haven demand on this metal.
Over intraday basis, high fluctuation is expected to side with possible downside corrections, several of which might be pretty brusque. Despite that, the short and mid-term expectations remain bullish.