Gold shy off all time highs and ready to break a new one!
Once again, the shiny yellow is just parading with its beauty and glory wrapped with an innocent masquerade of timidity only to assure its dominance once again; it is on the verge of striking a new all time record which indubitably is today!
Gold is starting today with steady upside bias consolidating at its highs following yesterday's gains moving closer to call the fourth consecutive weekly gain. The market is clearly volatile and gold is a pure reflection to that sentiment, equities and commodities fluctuated heavily and investors are still scattered day-in-day-out over the outlook for the global economy amid the debt crisis and the downside pressure on growth! So the one and only resolution was diving into the goods of the deep yellow mountains!
Yesterday gold locked in on a 1.8% advance to settle at 1244.85 after stretching to flirt with the record set on June 8 at 1252.11 only a dollar shy reaching 1251.00. The rise was trending since the morning yesterday were gold also performed strongly in Europe rising from $1234.50 in the AM fixing to $1245.00 in the PM fixing.
Gold managed to gain despite the subdued inflation reported in the Labor Department yesterday, where consumer prices dropped 0.2% in May the biggest since December 2008. Oil was also grounded affected by the rise in inventories and worries over the recovery which will dampen demand.
US fundamentals were not that bright this week, all awakening fears over the recovery despite somewhat muted fears over the European debt crisis. The manufacturing sector was expanding, yet at a slower pace, the housing sector took a big hit following the end of the government incentives, while the labor market remained weak all sending the jittery vibe in the market. Nonetheless, we still see that equities are heading to a weekly gain and the rise extended mostly across the weak on improved sentiment while the euro, the gauge of the trouble in the past period also managed to race higher.
All that did not prevent gold from heading higher; silver benefited from the rising equities, speculative power, and also preserved its haven demand. Silver, palladium and platinum all are ending with the gains this week where copper was the only metal on the receiving end!
Fears are persistent, and though Spain pulled a successful bond sale yesterday of 3.5 billion easing fears over the nation's ability to manage it deteriorating finances, that does not mean fears evaporated completely. Gold is standing at the gateways of new all-time highs on prevailing haven demand as uncertainty is only growing largest not smaller.
Gold was supported to hold onto yesterday's gains following comments from China where Yin Zhongqing vice chairman of the finance committee of the National People's Congress said that China should increase its holdings of precious metals and oil as part of its diversification strategy.
The sentiment is surely bullish, and with the lack of major news expect UK public finances figures, which surely hit the spot, we see the high potential for a new record to be set by the bullion today. So far, as of 8:20 GMT gold was little changed around 1245.5 down 0.26%; silver was also marginally lower by 0.17% around 18.74.