Gold fluctuates heavily ahead of the U.S. income report

With the start of the session today, gold fluctuated heavily within narrow levels on fears and expectations, where eyes are looking forward to the income report from the world's largest economy later in the day, while released manufacturing data pressured markets to the downside and supported the U.S. dollar to gain some strength against other majors, reflecting negative demand for metals and commodities.

Gold started the session at $1699.57 per ounce, and recorded the highest at $1709.90, but then reversed to a low of $1691.48, and is trading in the moment at $1695.07 per ounce, and is expected to cut some of the gains recorded yesterday, unless U.S. surprises us with a better-than-expected income report.

Gold as we expected yesterday closed the session in New York with gains, where the weakening U.S. dollar along with correctional moves supported the metal to rebound and gain some momentum; however today pessimism returns to the market with the start of the session after the downbeat manufacturing data from China, Germany and the euro zone.

China released the HSBC flash manufacturing purchasing managers' index for November, which contracted to 48.0 from 51.1 recorded earlier, raising fears that the global slowdown hit China and now the escalating debt crisis is forcing more pressures of the Asian region, which used to lead the expansion globally.

German manufacturing sector contracted beyond expectations to 47.9 from 49.1 according to the manufacturing PMI November advanced reading. But on the other hand, the services sector advanced better than expectations to 51.4 from 50.6 in November.

The euro zone PMI manufacturing contracted to 46.4 from 47.1, but on the other hand the PMI services advanced to 47.8 from 46.4, and in result the composite PMI advanced to 47.2 from the previous of 46.5.

The euro-area region, in case European leaders didn't intervene fast and support markets to rebound by tackling the debt crisis once and for all, the region could go through another phase of recession as the debt crisis is escalating, forcing more pressures on global growth and the pace of recovery.

Belgium and France are to hold talks in regards to the bailout plan for Dexia Bank over the distribution of the costs between both nations, raising fears in the market as France could bear more now, which threatens the French triple-A top rating, according to a Belgian newspaper.

France is already under review for a possible credit rating downgrade, where the nation's top rating is threatened by rating agencies which explained before that another bailout for Greece could stretch the French budget, while France will become exposed more to the Greek debt crisis, and in result a downgrade is highly possible now, especially when France is expected to end up paying more to rescue the French-Belgian Dexia Bank.

Silver retreated sharply today after starting the session at $32.67 per ounce, where the strengthening U.S. dollar forced downside pressures on metals to trade lower today. The metal also recorded a high of $32.87 and a low of $31.73, and trades now around $31.85 an ounce.