Gold slumps as pessimism dominates the market

Gold started the session today biased to the downside after European leaders revealed the plan for Greece, which reduced the level of uncertainty, where now all eyes are focused on the December 4-5 vote on Greece's future in the one-currency union; however, pessimism dominated the market after leaders decided to cut off the entire financial aid for Greece until the vote.

Gold opened the session in Asia at $1738.35 per ounce and recorded the highest at $1739.85 and the lowest at $1722.64, and is currently hovering around $1726.26 per ounce, cutting the gains recorded in the past two sessions.

As we can see Europe remains the main focus in the market especially when the debt crisis seems to be worsening and deepening instead of ending, where after European leaders found a comprehensive plan to support the euro-area region and tackle the debt crisis, the Greek Prime Minister came to hinder the steps taken to stop the debt contagion.

Gold is biased to the downside today, ahead of the European Central Bank rate decision in addition to the G20 meeting for two days starting this morning, where pessimism is dominating the market and the U.S. dollar benefited the most forcing downside pressures on other major currencies, metals and commodities.

The U.S. dollar opened the session today at 77.06, and recorded the highest at 77.49 and the lowest at 77.01, and is currently trading with gains around 77.42.

The euro declined sharply today, after the news that Greece will still hold the general referendum, where after hours of meeting in France with European lawmakers, the Greek Prime Minister, George Papandreou insisted to hold the referendum saying the Greeks should determine the fate of their country.

On the other hand, a no vote from Greeks will lead Greece to a default especially after leaders said that Greece will not get a single sent unless it approves the bailout deal and apply the demanded austerity measures. In addition, the European Union suspended the next tranche of 2010's bailout package worth 8 billion euros until the vote result in December.

Gold could be very volatile and could also fluctuate heavily today due to the heavy fundamentals awaited from Europe today in addition to any comments from lawmakers which could extend the pessimism in the market or spread hopes that Greece will be able to stay in the euro-area region and leaders will tackle the debt crisis.

Among other precious metals, silver also declined sharply today and cut the gains recorded in the past session, where after the opening of $34.24 per ounce, silver reached a high of $34.29 and then reversed to the downside reaching the lowest at $33.25, and is currently hovering around $33.43 per ounce.