Gold trades within narrow levels, fluctuates heavily
Gold is still biased to the downside as we can see the metal is affected by the deepening debt crisis in Europe and is fluctuating heavily ahead of the heavy data from the United Kingdom and the world's largest economy, where all these factors together supported demand for the low yielding U.S. dollar, reflecting negative demand for precious metals today.
Gold opened in Asia today at $1714.57 per ounce, and extended the losses incurred yesterday to currently trading around $1709.50 after setting the lowest at $1705.21 and the highest at $1723.97 per ounce.
European leaders were able to provide markets with a final plan to tackle the debt crisis once and for all; however, all eyes are focused on the implementation of the measures and steps taken to tackle the two-year old debt crisis.
Moreover, the Greek Prime Minster, George Papandreou added more volatility and pessimism to the market, as he announced that Greece will hold a general referendum on the 130- billion euros second bailout deal approved by European leaders last week, where leaders attempt to overcome the debt crisis and contain the contagion, but on the other hand Papandreou comes to intensify fears and rising debt woes.
Papandreou said that he seeks wider political backing for the austerity measures and structural reforms required by international lenders, and also said that Greeks must decide the fate of their country; however, a no vote will trigger heavy pessimism in the market, where Greece is expected to run out of funds on January and we will return to option one a Greek default.
Furthermore, the Chinese manufacturing sector's performance slowed beyond expectations to the lowest level since February 2009, which supported the U.S. dollar to gain more strength against other major currencies, as we can see losses are seen widely across the board, which led investors to close their positions on gold to cover their losses.
We expect markets to fluctuate heavy ahead of the gross domestic product figures from the United Kingdom, where the nation will provide the figures for the third quarter today, with all eyes are focused on the results, especially after the economy grew only 0.1% in the previous quarter, affected by the slowdown in global growth in addition to the deepening debt crisis in the euro-area, which is the United Kingdom's biggest trade partner.
Among other precious metals, Silver also declined today after starting the session at $34.23 per ounce, where the metal recorded the highest at $34.68 and then reversed to the downside reaching a low of $33.53, noting that the metal trades now around $33.60 per ounce, extending the losses seen earlier.