Positive Asia pushes metals down while markets await ECB decision
Yesterday, unlike today, lacked any major economic data. The markets were left to prowl on their own fate and sentiment. Thus, precious metals made little movement.
The sentiment was relatively positive yesterday, Federal Reserve's Ben Bernanke, confirmed steady growth in the world's leading economy. This added some confidence among investors in the markets, relieving them of the need for a safe haven and alternative investments usually sought in precious metals. Gold closed lower at 1233.20 after opening at 1236.40, while silver fell from the opening 18.25 to closing levels of 18.11. The European debt crisis has so far had limited effect outside the continents borders, though remains the markets' biggest fear as they see the lingering possibility of its spread and downside pressure on the global economy.
However, the Asian session marked the start of a chain of positive events, offset the aforementioned fears of the spreading dismay of the debt crisis. Japan was the pioneer, reporting accelerating economic growth. This poured some optimism into the markets causing precious metals to decline.
The country of the rising sun was followed by the world's fastest growing economy. China revealed to investors ongoing recovery buoyed by exports and global demand with surging trade surplus. Exports had highly overtaken expectations, providing the markets with more euphoric sentiment. Asian stocks closed with gains as in the case of Nikkei which advanced 1.10% and S&P/ASX 200 that rose 1.14%.
This morning precious metals are still declining, due to downward pressures from the positive Asian data. Gold has been strolling to the south steadily, opening at 1233.15 and reaching a current level of 1227.09. Not only does the Asian improvement stand behind gold's drop, but another factor could be seen as profit-taking that is taking for the last two days after the yellow metal set another record high on Tuesday.
Silver and platinum have also been climbing down. At exactly 03:16 EST they are trading at 18.07, 1528.00 consecutively which equals a drop of 1.04% and 0.07% in the same order. The two metals' decline may be limited due to their industrial qualities, which would play a significant role amid a rising trade balance in China.
The commodity market was no exception, as the S&P GSCI added 10.57 points yesterday before closing at 488.84. Oil has been a driving force in the commodity, especially with the improvement in the fossil fuel thirsty Chinese economy. The price of crude futures has been climbing for four consecutive days now, starting its upward climb on Monday with the opening 70.400 and reaching a current level of 74.375 today.
This day, all eyes will be fixed on the ECB's rate decision and especially Jean-Claude Trichet's press conference. This is bound to add some pretty sever fluctuations until Trichet bestows the market with his analysis of the current situation and possible future policies, especially as markets await details regarding the newly adopted bond program in hopes to ease the tension over the credit crisis and lower rising borrowing costs for indebted nations. Over intraday basis, precious metal are expected to resume their current course to the downside if the positivity detected in Asia prevails into Europe and the US and Trichet does not disappoint investors which might trigger the resumption of the upside move.