Gold trades narrowly, negatively biased
With the start of the session today, gold fluctuated heavily within narrow levels, yet biased to the downside after the correctional movement seen yesterday, where the metal is affected by the mixed sentiment seen in the market ahead of the finance ministers meeting, the Italian bond sale and Osborne's Autumn statement.
Yesterday, gold was able to cover the bearish opening gap and then gained more strength; however the gains were limited as the optimism seen was only a correctional movement as we indicated in the analysis, and now the metal returned to decline as pessimism is still dominating the market and sharp volatility is seen.
Gold started the session in Asia at $1711.20 per ounce, and fluctuated heavily between the highest level recorded at $1714.34 and the lowest one recorded at $1703.50, and is trading now around $1706.77 per ounce, and is expected to extend the downside movement.
Technically, gold could extend the downside movement in case the metal was able to breach the level of 1702.00 bearishly; however, a daily closing above the ascending resistance level at 1719.00 could support the metal to rebound to the upside, targeting the level of 1740.00 and then 1750.00.
Europe remains the main focus in the market, while pessimism is still evident ahead of the finance minister meeting today, where investors are looking forward with hopeful eyes that policy makers will finally implement the measures approved earlier, including the usage of the European rescue fund in fighting back the debt crisis, providing governments with credit lines especially when the euro-area region is projected to slip back into recession and finally intervening in the bonds market to quell jitters and control the rapid incline seen on yields.
In addition, Moody's announcement that 87 European banks will be put under review for a possible downgrade was added to concerns that European leaders must act in unity and as soon as possible to prevent the spread of the crisis, especially when Europe is facing more challenges by time since leaders are not showing sufficient commitment to overcome the debt crisis, as we can see growth is weakening, recession is on the doors, unemployment is rising and the debt crisis is spreading in terms of rising bond yields.
Moreover, Italy is to sell as much as 8 billion euros of bonds with three different maturities, with expectations yields are to remain above the 7.0% seen in the last auction, which if confirmed, could support pessimism to extend further in the market and urge European leaders to act fast to tackle the debt crisis before time runs out and the debt crisis moves to another level.
Among other precious metals, silver started the session in Asia at $31.75 per ounce, and recorded a high of $32.08 and a low of $31.50, and is trading in the moment around $31.68 per ounce and is expected to rebound slightly to cover the opening gap seen today.