Unwinding of pessimism and readjustment over optimism!
Investors are optimistic, and gold is no longer enjoying its shiny appeal! Yet, for me, I would really avoid calling it optimism for I can assure you this state will not last and investors will turn the market bearish again and take gold higher, on reversal to optimism and pessimism over the outlook, and for that I would rather call the current market conditions are reassessment and revaluation for the seen bearishness in the past period and unwinding of the excessive pessimism just not optimism!
We saw how the dollar continued its southern course bolstering other major currencies alongside rising equities and commodities. The DJIA settled yesterday with 1.2% rise at 101389.99, the gains spread across the board where the S&P 500 and crude all ended with gains, and still that did not trigger gold gains, especially as investors are very confident over contained inflationary threats for now.
Yesterday, the BoE left rates and the APF steady, while the ECB which followed suit, still signaled continued liquidity operations as well as preserving its bond program. Trichet supported the sentiment as he dismissed expectations for a double dip recession saying that fundamentals do not signal that, and assuring that the supportive and stimulus measures, especially the bond program, is not needed as much now by the market as the secondary market is normalizing, easing the fear over the extent of damage which hit the euro area financial system form the debt crisis.
Today, the South Korean central bank raised interest rates unexpectedly to contain inflation and citing strong recovery and growth in the nation. The move supported the prevailing relaxation in the market and pushed Asian shares to the upside, extending yesterday's rally, where Nikkei 225 index ended higher by 0.57%.
Gold yesterday ended down 0.39% closing at 1198.00, while silver fell 0.55% at 17.96. Platinum was also included in this bearishness which assures our choice of words to call it readjustment and unwinding of pessimism rather than optimism, as if it was the case industrial metals should have been on the rise; platinum settled at 1518.00 down 0.46%.
The S&P GSCI ended higher by 6.46 to 497.50 while RJ/CRB rose marginally less weighed by the lazy performance from metals as the index added only 1.27 point to 259.51.
This sentiment so far as continued into the market today, as we are about to cap a week of green for commodities and equities opposed to the deep red seen recently, yet metals were not that lucky and especially gold which is down for the third week.
As of 02:57 gold was trading marginally changed around 1197.60, silver was down 0.37% at 17.89 and platinum gained slight momentum to the upside trading around 1521.00 up by 0.20%.