Gold lower on uncertainty after yesterday's gains
Gold declined at the beginning of the European session affected by several factors; the rising dollar, spreading fears in the markets after Trichet's conference and yesterday's U.S. data which indicated at a weakening U.S. economy.
Precious metals were affected by the incline in the U.S. dollar, where USDIX inclined to record 74.18 the highest level this week, which led investors to avoid buying precious metals.
Yesterday, Trichet raised concerns and fears again in the markets, after he significantly indicated that interest rates will be raised next month, which spread fears toward the economic recovery pace in the Euro zone, because of the tightening monetary policy's negative effect, especially with the debts crisis in the zone, where futuristic expectations indicating a slowdown in the pace of growth in the second quarter, and at continuous rise in inflation above 2%.
The euro continued to decline against the dollar to record the low of $1.4465 for the week. Despite the ECB's signal to raise the interest rates, the move was already expected in the market, whereas the positive effect of this data reflected in the market during the entire week when we witnessed the Euro inclining against the dollar achieving the highest in four weeks
Yesterday, the U.S. data forced negative pressures on the precious metals, where jobless claims increased in the past week beyond expectations and the last reading which spread fears toward the future of the largest economy, especially after the last jobs report that showed the performance of the U.S. labor market slumping to the lowest in the current year.
Gold demand as a hedge will be negatively affected by tightening monetary policy in the Euro zone in addition to rising concerns regarding the global recovery, and finally the negative effect of the debt crisis in the zone.
Yesterday, RJ/CRB closed inclining by 2.50 point to trade around 350.84 point. S&P GSCI closed around 710.27 inclining by 6.71 point.
Today, gold declined to record the low of $1540.36 and inclined to the high of $1544.50 comparing to the opening price of $1543.87, and is currently trading around $1542.96 per ounce. Silver is trading around $37.49 and recorded the high of $37.85 and the low of $37.24 comparing to the opening price of $37.54 per ounce.