Gold could gain today amid deepening debt crisis
Gold is fluctuating sharply today after opening the session at $1778.65 per ounce, where the metal is affected by the worsening and deepening debt crisis, but on the other hand the strong dollar forced downside pressures on the metal to trade lower.
The yellow metal after the opening of $1778.65 per ounce, recorded a high of $1790.00 and a low of $1769.40, and is currently trading around $1787.50 an ounce. Gold could recover some of the losses seen yesterday, amid rising demand for havens and worsening outlook in Europe.
Yesterday, we expected the metal to cover the opening gap; however we expected the metal to incline in General during this week, as the worsening debt crisis, the downbeat growth outlook and the faltering recovery should boost demand for havens.
In general, investors are anxious and terrified regarding a Greek default, which could reflect huge impact on the euro zone, the common currency and global growth, where confidence returned to be weak and pessimism dominates the market again raising demand for havens today.
The metal's movement is limited around the opening level; however we expect gold to incline today amid the worsening outlook of the euro area, especially after the rating agency, Standard & Poor's downgraded Italy credit rating by on notch to A from A+.
S&P's cut Italy's credit rating with a negative outlook on fear the weakening growth and the fragile government will not be able to cut and handle the second largest debt in the euro area, according to the statement from S&P yesterday, raising doubts that Italy in spite of the several moves taken by Silvio Berlusconi, the Italian Prime Minister, to cut spending and apply austerity measures, the country could fall into a debt crisis as Greece and could fail to prevent the contagion of the crisis from expanding within the Italian economy, where the shiny metal could advance today as demand for safe havens surges.
Moreover, the Greek finance chief, Evangelos Venizelos is to continue the emergency teleconference with international lenders today, as the minister said yesterday that he has held substantive discussions with the European Union and International Monetary Funds officials regarding the next tranche and the new bailout.
Furthermore, the U.S. President, Barrack Obama announced new deficit plan and proposed to raise taxes by $1.5 trillion on wealthy people and corporations, where the Presidential proposal aims to raise taxes on individuals who make more than one million dollars. In addition, Obama's plan includes $580 billion in cuts in Mandatory benefit programs, adding $48 billion in Medicare and $72 billion in Medicaid and other health programs. Another $1 trillion in cuts will be added from withdrawing military forces from Iraq and Afghanistan.
Silver declined slightly today after opening the session at $39.64 per ounce, however, the metal is moving within narrow range, after recording a high of $39.66 and a low of$39.13 and is currently trading around $39.52 an ounce.
Among other metals, platinum declined sharply after opening the session at $1809.00, recording the highest at $1810.00 and the lowest at $1769.00 and is currently trading below the yellow metal around $1777.00 per ounce.