Gold steady this morning after strong slump

Gold started the day with a steady tight range movement after the biggest drop in seven weeks yesterday on the heavy selloff in commodities and across the board that eventually ate through the appeal of the metal as a safe haven.

Gold is little changed this morning around $1520.44 between the high of $1525.73 and the low of $1519.90 per ounce as of 02:21 EST. On the other hand, silver remained under pressure from the risk aversion and the prevailing pessimism and extended the bearishness this morning to currently hover around $34.91 down nearly 1.0% after it recorded the high of $35.35 an ounce and the low of $34.87 per ounce.

We can see the sentiment in the market still mixed and the jitters over the outlook for the recovery are wide spread in the market. The dollar is still holding the gains and rising versus its major rivals despite the relief signs in the debt crisis with the EU leaders endorsement of the Greek austerity measures, which still did not disperse the negativity as eyes are locked on the final negotiations in the second day of the summit today.

The heavy selloff in commodities yesterday was sparked by the pessimism and fears over the recovery after the Feds slashed growth forecasts for this year, and the negativity extended heavily to gold and silver after a strong selloff on crude. The selling pressures on crude were markedly seen after the IEA said it will release stocks to compensate lost Libyan supply which took oil briefly below $90 a barrel and ended with heavy losses.

With gold losing the upside appeal and the dollar on the rise, we can see greenback affecting the metal and taking it to the downside. The dollar index is currently trading around 75.35 higher by 0.18% recording the low of 75.22 and the high of 75.40 after it settled with strong gains yesterday at 75.21.

We can see the downside pressure on gold valid today and with trading below $1522-20 areas we expect the downside move to be evident, especially with the prevailing dollar strength. Eyes will be on the final comments from the EU leaders to ease the selloff and followed by the final GDP revision from the United States which can also ease the selloff across the board and help gold recover its appeal on a weakening dollar.

The longer run course for gold remains negative yet for today the volatility is high and the inability of stabilizing above $1522 areas will keep the downside pressure valid for now.