Gold is to end a strongly bearish week

As this week comes to an end, gold is biased to the downside and is expected to continue the downside movement today before closing this week with huge losses, where pessimism is still dominating the market, especially with the lack of fundamentals from major economies in addition to the disagreement of European leaders over the role of the European Central Bank in fighting the debt crisis and the issuance of European joint bonds.

Over weekly basis, gold opened this week in Asia at $1723.25 per ounce, and recorded the highest at $1726.32 and the lowest at $1666.54. Over daily basis, gold opened today at $1694.34 per ounce, and reached a high of $1696.55 and a low of $1680.03, and is trading at the moment around $1681.80 per ounce.

Pessimism spread in the market yesterday, after the German Chancellor, Angela Merkel disappointed markets as usual and reassured that Germany is still against the intervention of the European Central Bank in fighting back the debt crisis. Merkel also confirmed that Germany is against the issuance of European joint bonds, where the chancellor said that the issuance of joint bonds would remove any incentives for European nations to improve their budgets and fiscal consolidation.

After the lack of results from the European leaders meeting yesterday, pessimism spread more, while the sentiment deteriorated further as markets were looking forward to the meeting and hoped that Germany while allow the European Central bank to support markets to restore confidence and intervene to calm rising jitters and debt woes, especially after the debt crisis threatened Germany on Wednesday, when the nation failed to sell as much bonds as targeted, which led the German Central Bank (Bundesbank) to buy almost half of the amount offered.

On the other hand, the U.S. dollar gained the most this week and is currently trading near the highest level in seven weeks, which added more pressures on the metal to trade lower, where investors liquidate their positions on gold in order to cover the losses spread across the board.

The U.S. dollar gained as pessimism dominated the market this week, which attracted investors to hold the low yielding currency to avert as much risk as possible, as their risk for appetite eased.

The U.S. dollar index (USDIX) opened this week at 78.04, and recorded the highest at 79.30 and the lowest at 77.96, and is currently hovering around 79.30, and is expected to close the session today with gains.

Volatility is highly expected today, while fluctuations could remain evident in the market, especially with the lack of fundamentals from major economies and the U.S. early closing.

Silver also declined today after starting the Asian session at $31.76 per ounce, to currently trade around $31.39 after setting the highest at $31.82 and the lowest at $31.35 per ounce.

Platinum also lost strength after the opening of $1544.50 per ounce, and recorded the highest at $1548.75 and the lowest at $1535.25, and trades now around $1536.00 per ounce.