Gold extends the losses amid a strengthening dollar
Gold retreated today after opening the Asian session, extending the losses recorded in the past session, where the strengthening dollar is still affecting the shiny metal to trade lower as investors sold their positions on gold in order to cover the losses seen across the board, while the strengthening dollar gained big time as demand for safe haven surged.
Gold slumped today after opening the Asian session at $1860.65 per ounce, recording a high of $1862.00 and a low of $1826.12, and is currently hovering around $1841.72 per ounce.
With lack of fundamentals today, the shiny metal is still moving against the U.S. dollar, which reached a six-month high and recorded the biggest weekly gains since October 2008 the past week.
The dollar index advanced after the c ommon currency retreated in middle of the worsening debt crisis in Europe, where Greece could suffer from a possible default in case the Greek government was unable to resolve the shortfall in reducing the deficit, where the European Union and the International Monetary funds required in order to provide the nation with the second bailout approved back in July.
The U.S. dollar, which tracks the dollar's movement against other major currencies, inclined today after the opening gap seen today, where the index closed in New York on Friday at 77.15 and opened the session today at 77.45. The index is currently trading around 77.49, after recording a high of 77.77 and a low of 77.31.
On the other hand, the Greek Prime Minister, George Papandreou, approved today to apply new austerity measures to reduce the deficit with another two billion euros in order to meet the requirements set by European lawmakers in attempts to qualify his country to get the suspended aid tranche.
The finance minister Evangelos Venizelos announced the Cabinet's approval to cut one month's wages from all elected officials and impose an annual charge on all property for two years which will be charged through electricity bills to ensure rapid collection.
Moreover, French top banks are expecting a possible downgrade as sources related to the issue said, while Moody's, the rating agency cited French banks exposure to the Greek debt crisis, where French lenders have the highest overall exposure to Greece, according to the Bank of International Settlements.
The banks exposed for a downgrade include BNP Paribas, Societe Generale and Credit Agricloe, as several sources said. This possible credit rating cut came after the French President, Nicolas Sarkozy, called on the Finance Ministry to come up with an austerity plan to overcome the challenges facing the European nations and France in general.
Gold could rebound to the upside in case the U.S. dollar's positive momentum weakens, as the high level of uncertainty, the downbeat growth outlook, the worsening debt crisis and the pessimism seen in Equities should support investors to hold more gold as a safe haven and a hedge against uncertainty.
Silver fluctuated heavily today after opening the Asian session at $41.52 per ounce, however the metal is negatively biased and retreated during the session after reaching a high of $43.35 to a low of $40.43, while the metal trades now around $41.30 an ounce.
Volatility is also dominating Platinum's movement, where the metal opened the session today at $1838.00 per ounce, and recorded a high of $1845.00 and a low of $1831.00 and is currently trading around the opening level.