Markets rebound on steady German growth
With the start of the European session, markets rebounded to the upside on steady German growth, which led gold to gain some positive momentum after the losses seen yesterday, where the sentiment improved slightly, yet it remains fragile ahead of the confidence survey from Germany and the gross domestic product figures from the United Kingdom.
Gold opened the session in Asia at $1691.50 per ounce, and recorded the highest at $1697.53 and the lowest at $1687.40, and is trading at the moment around $1696.17 per ounce.
Yesterday, sharp pessimism dominated the market after Germany failed to sell as much as 6 billion euros of bonds, which added to concerns that the debt crisis threatens now the euro-zone largest economy, which led the Bundesbank (the German Central Bank) to intervene and buy as much as 39% of the total amount offered after investors bought only 3.644 billion euros of bonds.
Gold fell yesterday after the U.S. dollar appreciated against other major currencies, where the sharp wave of pessimism that hit the market spread losses across the board, leading investors to excessively demand the low yielding currency, reflecting negative demand for other currencies, commodities and metals, where investors liquidated their gold position to cover some of the huge losses seen yesterday.
The correctional movement seen in the market was supported by the steady German growth, where Germany grew 0.5% in the third quarter compared with 0.3% expansion seen in the second quarter, where the improvement in the GDP figures was driven by the better than expected exports, personal consumption and government spending figures.
Germany released the gross domestic product report for the third quarter in a final reading, where the non-seasonally adjusted annual index slowed to 2.5% from 3.0% recorded in the second quarter, while the seasonally-adjusted quarterly GDP index expanded by 0.5% compared with the previous of 0.3%, supported by the improvement seen in exports, personal consumption and government spending.
China cut the reserve ratio required from the rural credit cooperatives by 0.5%, where this movement aims to provide more liquidity for financial institutions in order to support fund circulation in the Chinese economy, where the credit loosening action is driven by the need for more measures to support growth and prevent China from following other nations hit by the global slowdown.
Volatility and heavy fluctuations are highly possible, especially with the absence of the United States and Canada, which are to celebrate thanksgiving today. Markets will remain instable also ahead of the gross domestic product figures from the United Kingdom and confidence figures from Germany.
Silver also recovered some of the losses incurred yesterday, supported by the relief rally and the weakening U.S. dollar, where after the opening of $31.60 per ounce, the metal reached a high of $32.12 and a low of $31.50, and is currently hovering around $31.95 per ounce.
Among other precious metals, platinum gained slightly after the opening of $1548.00 per ounce, where the metal set the highest at $1558.50 and the lowest at $1539.25, and trades now around $1549.75 per ounce.