Precious metals decline as optimism spread in the market
Precious metals fluctuated heavily after the opening in Asia, affected by the mixed sentiment in the market, where Moody's downgraded Spain credit rating by two notches, while France and Germany agreed on a new plan in attempts to overcome the debt crisis, awaiting the Bank of England Minutes, which includes detailed information about the monetary policy decision and how the vote was split.
Gold opened in the Asian session today at $1657.57 per ounce, and recorded a high of $1665.02 and a low of $1643.75, and is currently trading around $1644.60 an ounce.
Moody's downgraded Spain's credit rating by two notches to A1 from Aa2, the fifth highest investment level, on a continuous negative outlook due to the weakness to market stress and sluggish growth prospects.
Moreover, optimism spread in the market today as we can see major currencies gained strength against the U.S. dollar, while European equities are trading all in green; however, metals are trading negatively today after the Bank of England Minutes showed that all of the MPC members voted to keep rates unchanged and also voted to expand the asset purchases program to 275 billion pounds.
As we can see all of the MPC members voted to expand the stimulus, which indicates that policy makers considered the downside risks on the economy and were in favor of stimulating growth rather than controlling the rapid incline seen on inflation, which reached 5.2% over annual basis.
Markets could be very volatile, while fundamentals and comments from lawmakers could trigger more fluctuations, awaiting the critical summit on October 23, where as we are getting closer to the summit, markets are moving sharply, awaiting steps and plans to be revealed with hopes that leaders will cure the debt crisis and make a good use of the European Financial Stability Facility.
Among other precious metals, silver opened the session at $31.99 an ounce, and set the highest at $32.11 and the lowest at $31.29, and trades now around $31.35, cutting some of the gains recorded in the past session, where the metal closed in New York session yesterday at $32.00 per ounce.