Gold rebounds today amid renewed fears over Greek default
Gold inclined today after opening the Asian session, recovering some of the losses incurred in the past sessions; however, this rebound seen is still limited, affected by the strengthening dollar and the slight optimism seen in Asian equities today.
Gold advanced today after opening the session at $1814.81 per ounce, and recorded the highest at $1835.75 and the lowest at $1814.20, and is currently trading around $1830.30 per ounce.
In spite of the jitters and pessimism that dominated markets yesterday, gold retreated sharply as the dollar gained; however, the dollar started to weaken during the European session yesterday and closed the opening gap seen and extended the losses today.
As we expected, gold rebounded today to the upside as economic challenges facing major economies worldwide are still dominant, where the downbeat growth outlook, the worsening and deepening debt crisis, the faltering recovery and rising inflation are reasons behind the shiny metal to set new all-time record, but today the metal's bullish movement could be limited.
The sentiment in the market is still jittery, while pessimism is dominant and markets are volatile and fluctuating heavily as the future of the economy is still highly uncertain, which should support demand for gold to surge.
The shiny metal is demanded against uncertainty as a hedge tool, while rising inflation also forces investors to hold gold as a hedge against high prices pressures, while the downbeat growth outlook and the sovereign debt crisis in Europe support demand for gold as a safe haven. These factors are behind our bullish expectations for gold over medium term, as we can see no solutions are found regarding the crisis in Europe, the high debt in U.S, the recession in U.K and the weakness in growth across the globe.
Expectations for Greece are pointing at a default, where the country seems to be unable to meet the conditions and requirements set by the European Union and the International Monetary Fund, as the country failed to reduce the deficit as planned and had a shortfall of two billion euros, meaning that the country could not get the second bailout package, which led Germany to search for an alternative options and mechanisms to protect the banking sector in case Greece should default. However, the Greek Prime Minister, George Papandreou granted new measures to reach the budget deficit reduction target.
Furthermore, U.K is expected to release the consumer price index today, where the inflation index could have widened in August, adding more challenges on the nation to quicken the recovery pace, especially after the Bank of England maintained rates unchanged in order to revive the faltering growth and recovery.
Silver also inclined today after opening the Asian session at $40.26 per ounce, recovering some of the losses seen yesterday. The metal recorded a high of $40.98 to a low of $40.17 today, and trades now around $40.76 an ounce.
Platinum is trading narrowly today, after the opening at $1815.00 per ounce, where the metal is currently trading lower than gold at $1818.00 per ounce, after recording a high of $1823.00 and a low of $1802.00 per ounce.