Gold is biased to the downside as inflation data highlights the session today
The metal extended the downside movement which started since opening this week, where the metal is negatively biased and pressured to the downside as losses are well spread across the board, which leads investors to close their positions on gold to recover some of the losses, while on the other hand the U.S. dollar gains the most, ahead of the release of inflation data from Europe and U.S.
Gold opened the session today in Asia at $1779.40 per ounce and recorded the highest at $1783.53 and the lowest at $1762.69, and is trading in the moment around $1769.00 per ounce.
As we expected yesterday, gold was unable to record any gains affected by the strengthening U.S. dollar, which is demanded excessively as investors tend to avert as much as possible, forcing more downside pressures on commodities, currencies and metals. In addition, losses are well spread also in Asian equities, where all major stocks indexes are trading in red, which reflects the dominant pessimism in the market.
Eyes will be focused on inflation data today, where the Bank of England will release the inflation report, explaining the latest projections and the bank's outlook for inflation and growth, while the euro zone and the United States will release the CPI indexes for October, which could add more volatility and fluctuations to the metals market.
The sentiment is still shaky in the market, while jitters and pessimism is dominating markets and investors, awaiting developments from the euro-area region, where eyes are focused on Greece and Italy, as Greece is facing a parliamentary vote on the new cabinet today, while the new Italian premier seeks to form new government.
Fears are rising in the market, while tension is controlling investors who are looking forward to the Greek parliament to approve the new government led by Lucas Papademos, where Greece is approaching default and needs financial aid as soon as possible to meet its commitments and obligations, while obtaining the financial aid requires political stability and written acceptance of the second bailout deal to be provided to the European Union in order to hand Greece the 8 billion euro tranche of the last year's bailout package.
The debt crisis is spreading now in terms of rising yields, where after yields on Italian bonds climbed to new records, markets are tracking yields on Spanish and French bonds, which are also at high levels and still rising, creating another challenge for the euro zone, especially when rating agencies could intervene anytime and downgrade France credit rating, and in result indicating that the debt crisis could spread into the second largest economy in the euro zone, and in general could threaten the whole union.
Silver started the day at $34.45 per ounce, and reached a high of $34.52 and a low of $33.99, and is trading now at $34.20 per ounce.
Among other precious metals, platinum trades now at $1640.00 per ounce, after recording a high of $1645.00 and a low of $1611.0, noting that it opened the session at $1639.50 per ounce.
Metals are expected to remain negative biased during the session today; however, we also expect heavy fluctuations and market instability, awaiting the vote from the Greece parliament, inflation data and also the monthly jobs report from the United Kingdom, which is expected to show weakening labor market and added more concerns and jitters to the pessimistic outlook.