Metals are volatile amid mixed sentiment in the market
With the start of the session today, gold fluctuated heavily within narrow levels after the huge gains recorded in the past session, where the metal benefited from the lower cost of borrowing U.S. dollar announced by major central banks yesterday, which pressured the U.S. dollar to give up the gains recorded in the past week and in result spread optimism in the market and gains across the board.
Gold opened the session in Asia at $1745.95 per ounce, and recorded the highest at $1750.06 and the lowest at $1741.15, and is trading in the moment around $1741.82 per ounce.
Europe remains the main focus in the market, where the steps taken by U.K. and Germany reduced the sharpness of the pessimism seen today, especially after data released earlier today showed that the Chinese manufacturing sector contracted beyond expectations in November.
The Chinese purchasing managers' index for manufacturing sector showed that the performance of the manufacturing sector shrank in November to 49.0 from the previous of 50.4, more than the expected contraction of 49.8, which added to concerns that China, which used to lead the global growth and expansion, is now affected sharply by the global slowdown and the escalating debt crisis, which led the People's Bank of China yesterday to cut the reserve requirement ratio in order to spur growth and revive recovery.
The United Kingdom is open to allowing changes to the European Union's treaty in case these changes will be able to help the euro zone to resolve the debt crisis, which slightly eased the tension and now the European Union could achieve closer integration among the one-currency nations, as the British employment minister told Reuters.
The German Finance minister said Germany is open to boosting the firepower of the International Monetary Fund (IMF) by using bilateral loans or increasing the special drawings rights (SDRs).
We expect gold to decline as the downbeat PMI manufacturing from Europe is expected to have a negative effect on the market, which in result could extend the pessimism seen and support the U.S. dollar to rebound to the upside and recover some of the losses incurred yesterday.
Silver opened the session today at $32.75 per ounce, and recorded the highest at $32.83 and the lowest at $32.48, and is currently trading around $32.53 per ounce.