Precious metal still idle while pessimism slowly returns to markets
Gold was playing on the market seesaw yesterday, as the yellow metal reached its historic high at 1251.83 before closing with a loss. Overall the markets were relatively calm due to lack of any important fundamentals; however two main events were able to nudge dozing investors. Fitch Group warned the United Kingdom that the country could be losing its AAA credit rating, if the budget deficit will continue to linger with no signs of visible improvement. This announcement, though predictable, did stir investors' fears and caused gold to skyrocket to a new historic peak.
However, the first event seemed to have been overpowered by the second, where the European financial ministers detailed their loan package bailout for debt-laden nations. The euro had actually gained on this news and closed at 1.1970 rising from opening level of 1.1923. On the other hand, despite gold's race to a new record investors locked in on their profits and speculative investments pulled the metal to close lower with marginal losses.
With the higher euro, the dollar index went the opposite path. After opening at 88.45 the greenback's index slipped to 88.08. Due to close relationship between the American currency and price of crude, oil prices have made a considerable advancement climbing to 72.45 from the opening of 71.12. It was the second consecutive session of gains for crude following Friday nosedive, when crude lost almost $4 amid the sell-off seen across markets.
Today the markets have returned to their negative stance, which is becoming the usual flow of things. Asian stocks ended today with a decline, as Nikkei lost 1.04% trailing their European peers despite the American gains, as in the case of DAX 30 it dropped 0.62% and so far futures signal for a soft opening as well.
Precious metals have recorded a slight movement in the Asian session today. The overall negative sentiment in the markets seemed to have stopped yesterday's decline for gold, however the metal remains very close around opening levels of 1236.40.
Silver was slightly higher today especially when compared to yesterday and Monday's surge. This can be interpreted as easing speculation on the metal, which is considered one of the most preferred speculative tools in the markets. Platinum has so far been on the rise and is trading at 1526.00 after closing at 1516.00 yesterday. Yet, we can attribute the bullish gains for both metals due to their industrial usage which was supported after strong trade figures from China assuring that the tycoon continues strongly in support of the global economic recovery.
With little important data, the markets are left to prowl on their own and under the general sentiment. With the reigning pessimism in the global economy we can expect precious metals, especially gold, to ascend further, as investors will find long sought security under the roof of the golden safe haven.