Gold recovers some of the losses ahead of the finance chiefs’ meeting
As this week comes to an end, gold is trading within narrow levels on Friday ahead of the finance chiefs' meeting today and the European leaders' summit on October 23; however decisions will be announced on October 26 latest, as leaders spilt on the mechanism of leveraging the European rescue fund (EFSF) and on providing a final plan to tackle the debt crisis once and for all.
Gold opened in the Asian session at $1620.38 an ounce, and recorded the highest at $1630.19 and the lowest at $1611.40 so far, and is currently trading around $1625.05 per ounce, recovering some of the losses incurred during the week.
Over weekly basis, the metal declined sharply due to profit taking by investors, who tend to close their positions on gold to cover the losses seen across the board. Gold opened this week at $1682.20 per ounce, and set the highest at $1694.85 and the lowest at $1603.75 per ounce.
The U.S. dollar also gained strength over weekly basis, as investors demand more of the low yielding currency in order to avert risk, where the U.S. dollar was able to force downside pressures on metals and commodities during this week, as we can see gold, silver and oil reversed sharply to the downside.
All eyes will be focused today on Europe, where European finance chiefs are to meet in Brussels to set the guidelines for leaders to discuss during the coming summit, including the use of the European Financial Stability Facility and finding an appropriate plan to overcome the debt crisis.
Moreover, the European Union and International Monetary Fund recommended yesterday that Greece should obtain the sixth tranche of 2010's bailout package as soon as possible despite the fact that Greece reached none of the targets set for 2011 due to the more than expected slowdown in growth, yet the Greek government will meet targets set for 2012, where the nation is to apply further austerity measures to control the deficit.
Yesterday, the Greek Prime Minister, George Papandreou won a vote of confidence in the Parliament on the expanded austerity package, which comprise of tax raises, pensions and wages cuts, and a plan to suspend more than 30,000 state workers in addition to provisions to break the collective pay-bargaining power of Greek Unions.
We expect gold to fluctuate heavily in the next week, until European leaders come to an agreement and find a final plan to aid the euro area, especially when a failure is expected to trigger more pessimism and volatility to the market in the time confidence is fragile and the debt crisis could worsen and deepen and most importantly could spread to larger economies adding more pressures on global growth and the pace of recovery.
Silver opened the session today at $30.56 per ounce, and then inclined to recover some of the losses incurred during the past week. The metal recorded a high of $30.97 and a low of $30.24 and is currently hovering around $30.77 per ounce.