Gold declines as pessimism dominates the market
Gold ended a strongly bearish week, cutting some of the gains recorded in the past three weeks; where the metal is biased to the downside and affected by the global slowdown and the escalating European debt crisis, where the strong U.S. dollar sent the metal south as investors tend to close their gold positions to cover the losses seen across the board.
Gold opened last week at $1788.14 per ounce, and recorded a high of $1795.78, but then reversed to the downside reaching a low of $1710.46, and closed the session in New York on Friday at $1723.00 per ounce.
Over daily basis, the metal started this week at $1723.25 per ounce, and recorded so far a high of $1726.32 and a low of $1712.61, and is currently trading around $1714.64 per ounce.
With the start of this week, gold continues the downside movement affected by renewed fears and rising debt concerns that Greece could miss the next payment needed to avert an early default, where one of the three leaders in the unity government refused to sign a written acceptance of the second bailout deal, which led pessimism to dominate the market again after the slight wave of optimism seen on Friday.
The leader of the main conservative party, Antonis Samaras refused to sign a written acceptance of the austerity measures under the bailout deal provided by the European Union, the International Monetary Fund and the European Central Bank Torkia to Greece in terms of conditional financial aid, as the leader said that his word can be trusted and there is no need for a written guarantee.
The metal lost big time last week as investors had to close their positions to cover the huge losses spread across the board, where rising yields on European indebted nations' bonds led investors to demand the low yielding U.S. dollar and avert risky investment, which pressured commodities and metals to the downside.
Spain was able to provide political stability as Mariano Rajoy won the biggest majority in the Spanish parliament in 29 years and became the New Spanish Premier, where the parliament backed Rajoy with 186 votes out of the total 350 seats as he pledged to cut the Spanish budget deficit and regain the nation's top credit rating of AAA and said we -Spaniards- will stop being a problem and become part of the solution again.
Metals are expected to extend the bearishness unless Greece provides a written acceptance. Yet, we recommend investors to pay attention this week as we expect markets to fluctuate heavily with the heavy load of fundamentals due this week, and also we recommend traders to keep an eye on European yields, where another incline could spread pessimism widely and force the ECB to intervene again.
Silver slumped sharply last week, and extended the losses incurred today, where after starting this week at $32.30 per ounce, the metal recorded the highest at $32.31 and the lowest at $31.43, and is currently trading around $31.44 per ounce.
Platinum also retreated after starting the session at $1582.75 per ounce, to currently trade around $1575.00. The metal set the highest at $1589.75 and the lowest at $1573.25 per ounce.