Silver continues rebound while gold dropsSilver continued its rebound for the fourth session, paring some of the losses incurred last week, as the Greek debt woes enhanced safe-haven demand on silver which was expected to do an upside correction this week.
Silver fell 27% the previous week, the sharpest weekly drop since 1975, following the fourth rise by the CME group on COMEX silver futures margins that became effective last week and yesterday which increased the cost of trading silver.
Meanwhile, the concentration is on Greece after yesterday's downgrade by S&P which lowered the country's credit rating to B from BB-, one level below the lowest credit rating. The country joined Belarus as the lowest rating in Europe and may need to restructure its debt otherwise it may default.
European debt woes are back on the scene again, where Portugal is close to getting the bailout, yet it may join the other nations' high indebted countries in suffering to repay debt, which cause the ECB to halt the process of raising interest rate as it will raise the cost of borrowing on debt-strapped nations.
Gold, on the other hand, could not continue the rebound that started last Friday as it dropped to $1509.05 an ounce compared with the day's opening of $1513.47, whereas Crude oil edged down to $101.36 relative to the day's opening level of $102.94.
The previous session, gold added $17.70 or 1.18% after closing at $1513.50 an ounce, while gold price was setin London at $1502.00 per ounce declining from $1505.00 during the AM fixing.
Among other precious metals, platinum edged down to $1792.50 from the day's opening of $1800.70, palladium plunged to $729.00 from $730.70 and silver inched up to $37.82 from $37.76, as of 07:35 GMT.
Probably, the advance in the US dollar that began last week after the sell off in metals and shares enhanced demand on the greenback is capping gold and other dollar-denominated commodities from rebounding strongly.
The dollar index, which tracks the dollar movements versus a basket of major currencies, rose to a high of 74.99 compared with yesterday's closing of 74.62.
Eyes this week will be inflation data from major economies which will provide an outlook about inflation which may affect gold as a hedge against inflation.