Gold could extend the gains as pessimism dominates the market
Gold fluctuated heavily today in the Asian session after the huge gains recorded in the past session affected by the unexpected weak non-farm payrolls, which added more jitters and fears, as the U.S. labor market stagnated in August and pointed at weakening pace of growth in the world's largest economy.
Gold surged today after opening the session at $1876.95 per ounce, recording a high of $1889.80 and a low of $1873.93, and is currently trading around $1880.75 an ounce.
Demand for the yellow metal as a safe haven surged on Friday after the downbeat jobs report from the U.S., which led investors to hold more gold amid slower pace of growth, and slower pace of recovery.
Global growth is cooling as we noticed weaker performance of the manufacturing sectors across the globe, and also weakening labor market, waiting to confirm the weakening services sector in Europe today as the euro zone, Germany and U.K are to release the closely watched PMI services index, which is expected to show slowing pace of growth in the services sector, adding more concerns that the global economy is approaching another recession. Therefore, demand for gold could also surge due to the high level of uncertainty.
Pessimism and jitters are dominating stock markets, as U.S. and European equities closed the past session with losses, while the Asian stocks declined today after recording gains in the past six sessions, reflecting rising fears and concerns, which should lead investors to head towards gold and low yielding currencies.
In Europe, the Italian Prime Minister Silvio Berlusconi seeks parliamentary support in order to apply 45 billion euros austerity package, to prevent the debt crisis from expanding within the Italian economy; however, a general strike is expected tomorrow against the austerity measures, adding more challenges on Italy to overcome the huge debt. The European debt crisis also keeps worsening as the flow of weak fundamentals continue to weigh on growth.
Today we expect low volume in general due to the absence of the world's largest economy along with Canada for Labor Day holiday, where the metal's movement could be limited after the European session; however we expect gold to close the session today recording some extra gains extending those recorded Friday.
Among other precious metals, silver inclined today extending the gains recorded in the past sessions, filling the opening gap seen earlier today, where after the opening of $42.96 per ounce, the metal retreated slightly to a low of $42.92 and then rebounded to the upside filling the opening gap and reaching a high of $43.35 and is currently hovering around $43.08 an ounce.
Platinum also surged today, as demand for precious metals surged today, where after opening the session at $1871.00 per ounce, the metal surged to a high of $1887.00 and is currently trade around $1886.00 an ounce.