Gold soft with the start of the week
Gold started the week off with downside movement as the dollar rose in Asian trading on prevailing jitters over the outlook for commodities and the debt crisis after the arrest of IMF chief Strauss-Kahn.
The start of the week was still dominated by the dollar strength, especially as investors started the week with losses across Asian equity markets and commodities as the focus returns on Europe and the debt crisis.
Gold for immediate delivery fell this morning to the low of $1487.10 an ounce and recovered to trade around its opening levels of $1494.35 an ounce slightly below the high so far at $1495.05 an ounce.
The metal recovered higher with the dollar dropping from the intraday high and amid the prevailing uncertainty in the market. The dollar index declined from the high recorded at 75.99 to trade bearishly now around the low of 75.71.
Investors shifted the focus from the strong euro area growth figures last Friday to the debt woes that burden the area. The EU finance ministers meet today in Brussels to discuss the ongoing fiscal crisis and expected Greek request for more aid.
The jitters extended as investors fear the arrest of IMF chief Dominique Strauss-Kahn will affect the negotiations on the EU-IMF bailout for Greece that might be extended or reassessed with eased terms.
International Monetary Fund chief Dominique Strauss-Kahn was charged on Sunday with a sex assault on a New York hotel maid and was taken into custody and awaits his first court appearance on attempted rape charges.
Gold is mixed with the fuzzy sentiment in the market and the dollar's evident strength that is keeping the metal under heavy fluctuations. Commodities also started the week on a softer note, and especially crude oil which further underpinned gold's gains.
Crude oil futures for June settlement head south to the intraday low of $98.12 a barrel from the high of $99.36 a barrel and currently trading bearishly around $98.45 a barrel. Oil declined on the outlook for demand after President Obama warned of the downside pressures on the global recovery shall the U.S. fail to raise its debt ceiling, which pressured crude lower.
Obama pressured crude to the downside further after he said the U.S. will increase oil production in an attempt to pressure gasoline prices lower to support the recovery.
Volatility is evident and the Greek crisis is the biggest downside weight on the sentiment. Gold should be capable of resisting the downside pressures in the market and attempt to restrain the losses on the back of a firm dollar as the uncertainty might help the metal move higher on renewed hedge and haven demand.