Gold advances on the downbeat results of German-French meeting
Gold advanced today after the opening in the Asian session, extending the gains recorded in the past two sessions, the jitters extended with the French President Nicolas Sarkozy and the German Chancellor, Angela Merkel meeting to discuss the European debt crisis in light of the downbeat growth outlook in the zone, where both chiefs rejected expanding the rescue fund and also rejected calls of joint euro borrowing to end the debt crisis which fueled fears over the worsening crisis.
The shiny metal returns to record gains on the European debt crisis where investors hold the safe haven to protect their wealth from the current financial instability in the zone due to the fears and jitters that control the market, especially after the losses seen across the board, where investors always tend to hold precious metals in addition to the low yielding currencies in the time economic conditions are highly uncertain.
Spot gold gained today after the opening at $1785.32 per ounce, continuing the upside journey and approaching the $1800 level, where during the session, the yellow metal recorded the high of $1793.30 per ounce and the low of $1780.90, and is currently trading around $1791.70 an ounce.
Merkel and Sarkozy, after the meeting in Paris, explained that euro area nations should cooperate closer, while tightening the rules to reduce the budget deficits are needed along with harmonization in the corporate tax rates. In addition, both of them agreed to revive a plan to resubmit a financial-transaction tax, which was already rejected back in 2010.
The European debt crisis seems to be worsening after all, where in spite of the European leaders and European central bank's several attempts to ensure financial stability in the market and reduce fears and jitters, we see that the crisis is not over yet, but deepening and expanding within the zone, supporting the shiny metal to set historic tops in July and August.
Moreover, the BoE minutes today, will not provide any further information or details, where the Bank is expected to keep key rates as they are at 0.5%, while the assets purchasing program will be unchanged at 200 billion pounds. In regards to inflation, high prices' pressure is expected to keep on rising further in the coming period as king explained and could reach 5% due to temporary factors as the he said in his third inflation open letter yesterday. This has affected the yellow metal to consolidate at high levels as demand for the metal as a hedge against inflation rose.
Volatility and heavy fluctuations are expected today as heavy data is to be released, with downbeat expectations especially after the slowing pace of growth and the downbeat data yesterday.
Among other precious metals, silver inclined today after the volatility seen in the past session to currently trade around $39.94 per ounce, after recording the high of $40.10 and the low of $39.74 an ounce.
Platinum also inclined today after the opening of $1815.00 per ounce, recording the high of $1823.00 and the low of $1814.00 and is currently trading around the intraday high.