Gold could gain as European leaders are back on track to contain the crisis
Gold is trading within narrow level since opening the session in Asia; however, the metal is expected to incline during the session as European leaders returned on the right track and are taking appropriate steps to contain the debt crisis, which could support the euro to extend the gains recorded yesterday against the U.S. dollar, easing the downside pressures forced on commodities and metals to trade higher today.
Gold opened the Asian session today at $1676.22 per ounce, and recorded the highest at $1684.10 and the lowest at $1669.40, and is currently hovering around 1678.57, and is expected to extend the gains in case optimism remained dominant in the market during the session.
While Europe remains the main focus in the market, we can see more steps taken by European lawmakers to contain the crisis in addition to the external pressures on Europe to overcome the crisis which has affected the global growth negatively over the past period.
Jose Barroso, the European Commission's President, in a meeting yesterday with European policy makers called on the European Parliament to agree on plan to shore the banking sector, to provide Greece with the next tranche of last year bailout package and finally act quickly in favor of starting the permanent rescue fund, which eased jitters and debt woes that spread pessimism widely during the past long period.
Moreover, and after the Slovak Parliament rejected the expanded powers of the European Financial Stability Facility (EFSF), a second vote is expected before the end of this week, where the vote could pass through the parliament after the largest opposition party supported the motion.
Gold could also be supported by the weakening U.S. dollar, especially after the Federal Open Market Committee (FOMC) Minutes was released yesterday and showed that some of the Committee members called for another round of quantitative easing, which raise doubts that the feds after announcing operation twist to support growth, could also go further for more stimulus and call for another round of quantitative easing in the coming meeting.
Another round of quantitative easing could have a bearish impact on the U.S. dollar for two reasons, where further stimulus include pumping more dollars to the market, and according to the supply and demand powers, more supply should affect the dollar to slump. The Second reason behind the bearish impact is that another round of easing should spread more optimism regarding growth in the world's largest economy, easing demand for the low yielding safe haven, which finally could support the metal to trade higher.
Silver also traded within narrow level since starting the session at $32.47 per ounce, recording a high of $32.71 and a low of $32.52, and trades now around $32.57 per ounce.