Precious metals advance as optimism dominates the market
Another week started with optimism dominating the market, where the critical European leaders' summit has quelled the jitters and debt woes and supported the slight confidence that euro-area nations are capable of fighting the debt crisis with a strong plan to aid Greece and recapitalize banks and prevent the contagion of the crisis from spreading into larger economies within the zone, supporting metals to trade higher today with their commitment to announce the steps on Wednesday.
Gold started this week at $1641.00 per ounce and advanced to a high of $1657.20 after reaching the lowest at $1635.27, and is currently trading around $1650.40 per ounce.
Precious metals advanced as the U.S. dollar lost strength, which eased the downside pressures forced on the dollar-denominated commodities to trade higher, especially after finance ministers agreed to hand Greece the European Union part of the sixth tranche of last year's bailout package, worth eight billion euros, by mid November, awaiting the International Monetary Fund's approval on the rest of the package.
As we can see the U.S. dollar retreated against the euro and the sterling pound amid optimism that European leaders have finally found a plan to tackle the debt crisis and recapitalize bank, where after they split over the mechanism of implementing the European Financial Stability Facility and the role of the European Central Bank, leaders have finally found common grounds to build up a new strategy, which will be announced maximum on Wednesday.
We expect metals to rebound this week in case European leaders were able to provide a strong plan to empower banks and secure the euro-area from the crisis on Wednesday, yet in case leaders disappoint investors, metals could reverse to the downside and extend the losses seen before.
With lack of fundamentals from the world's largest economy today, Europe remains the main focus in the market, especially after the European leaders' summit yesterday and the finance ministers' meeting on Friday and Saturday, where Germany and the euro zone are expected to released heavy fundamentals during the session, which we await to track the manufacturing and services sectors' performance in October with an advanced reading.
Among other precious metals, silver opened the session in Asia at $31.25 per ounce, and recorded the highest at $31.71 and the lowest at $31.18 and is trading now around $31.66 per ounce.