Gold advances amid downbeat growth outlook
Gold inclined today, extending the gains recorded in the past session, and returns to continue the upside journey, where after the yellow metal set a new historic record at $1814.85 per ounce, it slumped to reach the low of $1722.00 per ounce. However, the metal returned to trade higher after the data released in the euro zone largest economy, Germany, which showed the pace of growth was slower than expected in the second quarter, as growth lost some of its positive momentum, which supported the demand for the yellow metal as a safe haven.
Gold surged today after the opening in the Asian session at $1765.72 per ounce, recording the high of $1777.89 and the low of $1760.90, and is currently hovering around $1777.16 per ounce.
Germany released the preliminary reading of the gross domestic product index for the second quarter, where the annual non-seasonally adjusted GDP expanded by 2.8% from the adjusted prior of 5.0% from 5.2% and below the expected expansion of 3.2%. Moreover, the economy expanded by a seasonally adjusted rate of 0.1%, worse than the adjusted previous of 1.3% from 1.5% and below the expected expansion of 0.5%.On the other hand, the annual working day adjusted index improved by 2.7% less than the expected improvement of 3.1% and worse than the adjusted previous of 4.7% from 4.9%.
The slowing pace of growth in Germany should support the expectations for a slowing pace of growth in the Euro zone as a whole, while the downbeat growth outlook supported demand for the shiny metal especially after analyzing the reasons behind this slowing pace of recovery, which is the rising debt concerns and woes, where investors are still cautious and hold gold in order to protect their wealth, after the European debt crisis seems to be expanding to other countries within the zone despite the support provided to Greece, Ireland and Portugal by the European Union in order to help the nations to avoid default and prevent the debt crisis for expanding to other major countries, but they seem to fail, where we can see Italy could be the next victim of the debt crisis, while France is attempting to lower their deficit to avoid default.
As we can see, pessimism is dominant, while jitters and fears are controlling investors, in the time confidence is lost in the market, which all together raise the demand for the shiny metal as a safe haven, and as we expected the upside journey is seen again on gold, where we explained that raising the margins on gold futures' effect should be temporary and will not stop the metal from extending the gains or setting new historical records.
Among other precious metals, we can see silver slumped today cutting some of the gains recorded in the past sessions, where after the opening of $39.83 per ounce, the metal recorded the high of $39.87 and the low of $39.37, and is currently trading around $39.43 per ounce.
Platinum continues the upside journey after the decline seen in the past week, where the metal is currently more expensive than the yellow metal, which traded higher than platinum in the past week. The metal opened the session today at $1797.00 per ounce, and recorded the high of $1815.00 and the low of $1797.00, and is currently hovering around $1815.00 per ounce.