Gold advances as uncertainty dominates the market
As this week comes to an end, the countdown has ended and now European leaders are in Brussels discussing the fate of the euro-area region, where till now leaders where able to cover most of the subjects awaited by markets, yet uncertainty widened as investors are still looking forward to what European leaders will bring today.
Gold opened the session today in Asia at $1708.05 per ounce, and recorded the highest at $1715.66 and the lowest at $1703.21, and is currently trading around $1711.45 per ounce, recovering some of the huge losses incurred in the past session.
As fears remained evident in the market, the U.S. dollar gained as investors flee to safe havens in order to avert as much risk as possible, yet rising uncertainty in the market supported gold to struggle between downside pressures forced by the U.S. dollar and rising demand as a hedge against uncertainty.
European leaders agreed yesterday to expand the support provided for the International Monetary Fund (IMF) by an additional 200 billion euros, while the European Financial Stability Facility is expected to be rapidly deployed, in the time the ESM will run as a rescue fund with an expected firepower 500 billion euros.
On the other hand, the package of changes to the EU treaty was opposed by some nations, which in result led European leaders to come up with an intergovernmental treaty, which will include the 17 euro-area nations in addition to any EU nation that would like to join, where this treaty will become now the key solution to resolve the escalating debt crisis. In addition, European leaders also agreed to toughen budget rules.
Pessimism extended in the market after the European Banking Authority relinquished any hope for stability or hope for it after the EU summit, where the Authority raised the estimates for the needed capital by banks to 114.7 billion euros from 106 billion euros, as Europe attempts to raise the core Tier 1 capital ratio to 9% by mid 2012.
Among other precious metals, silver opened the session at $31.66 per ounce, and fluctuated within narrow levels, setting a high of $31.87 and a low of $31.42, and is trading now around $31.67 per ounce.
Platinum after the opening of $1494.25 per ounce lost as much as $0.13 or 0.01%, to currently trade around $1494.13, after setting the highest at $1507.25 and the lowest at $1487.50 per ounce.
Palladium also lost 1.48% or $10.00 after opening the session at $675.25, to currently trade around $665.25 per ounce, after reaching a high of $675.00 and a low of $659.00 per ounce.