Gold gains ahead of the heavy fundamentals from major economies today
Gold started the session in Asia today biased to the upside, as the high level of uncertainty led investors to hold more gold ahead of the heavy fundamentals expected from major economies today. We have the FOMC rate decision, the G20 meeting in the coming two days and finally awaiting more details from Greece on the general referendum, which brought pessimism and volatility to the market again, adding to concerns whether European leaders will be able to implement their comprehensive plan, leading the euro to collapse.
Gold opened the session in Asia today at $1719.70 per ounce, and recorded the highest at $1736.62 and the lowest at $1714.10, and is currently hovering around $1734.50 per ounce.
Eyes will be focused during the session on European fundamentals with unemployment figures from Germany in addition to the manufacturing data from the country and also the euro zone; however, investors' will shift their focus to the U.S. in the New York session, awaiting the Federal Open Market Committee (FOMC) rate decision and then Bernanke's speech.
Germany will start the session today with unemployment change figures, which could have declined by ten thousands in October from the previous decline of 26 thousands in September, while unemployment is projected to linger at 6.9% in the related month.
Moreover, the German purchasing managers' index (PMI) for manufacturing is expected to show stability in the October Final reading, unrevised at 48.9, while the euro-area PMI for manufacturing could have settled at 47.3 in October.
Turning to the U.S, the rate decision will highlight the session in New York today, with expectations that committee will vote to keep rates unchanged to add further support to growth and recovery, especially after the recent operations and steps taken by the Fed supported the economy to improve and expand beyond expectations.
Gold benefited the most from the two-year debt crisis in Europe, and still, the metal gains strength due to the high level of uncertainty in the euro-area region, especially after the Greek Prime Minister, George Papandreou shocked markets with his sudden decision to hold a general referendum on the second bailout deal, which could hinder the implementation of the European plan to tackle the debt crisis and prevent the expansion into larger economies.
Moreover, the Greek Prime Minister seeks an approval from his cabinet to hold the general referendum, where results are expected by the end of this year; however, Papandreou will fly to France to meet the French President, the German Chancellor and other policy makers. In addition, the European Union and International Monetary Fund could suspend Greece from the sixth installment of the last bailout package in case Greece held the referendum, while Fitch also warned Greece that referendum could increase the sovereign risk.
Among other precious metals, silver opened the session today at $33.27 per ounce, and is currently recovering some of the losses incurred this week, where the metal reached a high of $34.05 and a low of $33.03 per ounce, and trades now around $33.89 per ounce.
We expect metal to fluctuate heavily during this week ahead of critical fundamentals, meetings and decisions from policy makers and major economies across the globe, yet gold could gain more strength as uncertainty and pessimism are evident in the market.
Platinum on the other hand is trading around the opening level of $1589.5 per ounce, after setting the highest at $1605.5 and the lowest at $1580.25 per ounce, where platinum lost big time in the past two months and became cheaper than the yellow metal.