Fundamental Precious Metals (2010-05-31)

The US economy is recovering, Europe is debt stricken, China's economy is expanding though new tightening policies ought to slow things down for Asia's biggest economy, Japanese factory output is lower than expected and India is witnessing rapid expansion at 8.6%.

Inflation is still on the leash; moreover Japan fears deflationary pressures while other countries witnessed inflation settle at below preferred levels. On the other hand, future expectations anticipate a rise in inflation with more stability in the global economy. While consumption is expanding at a less than desired pace.

These mixed results from different corners in the economic world left their mark on stocks and commodity markets, which both plunged and then rebounded upward throughout the last week. This all contributes to the fluctuations experienced in the precious metal market.

This week started on a negative note for gold, while silver and platinum have been experiencing the opposite. Today, at 2:32 EST gold is trading at 1212.20 down by 0.17% from Friday's New York closing. Platinum on the other hand has gained 1.10% hauled by positive data from India. Silver has been pushed upward by speculative forces as today is surged 0.27% as is currently trading at 18.42.

Oil has witnessed some improvement after last week's slump, while the dollar index is down, contributing to silver's and platinum's gains. Gold seems to be unaffected by the greenback's and crude's movements, as the main factors affecting the yellow metal are the global economy and sentiment in financial markets. India's growth has turned investments to commodities and Asian stocks, where the Nikkei index has risen along with the Straits Times index while the Hang Seng slipped based on expected slowdown in Chinese demand.

Precious metals, especially gold, still follow a general uptrend. Instability in financial markets causes fluctuations in the gold market. This week we await important economic data such as European confidence, Canadian and Swiss GDP, Australian interest rate decision and the American labor report on Friday. All this will be reflected as fluctuations in the precious metals market and especially gold.

Gold is expected to experience great turbulence and downward corrections. Nevertheless, the general trend is still bullish, supported by the situation in the global economy with special emphasis on the Greek crisis that ensued waves of demand on a golden safe haven and alternative investment.