Metals are mixed ahead of a busy day, yet still negatively biased
Precious metals extended the losses seen this week after starting the session today, where pessimism is still evident in the market and the sentiment is deteriorating further as the escalating debt crisis threatens the global economy and fears spread in the market as investors seems to have no faith in the ability of the euro area to contain the crisis.
Gold opened the session today at $1572.80 per ounce and recorded the highest at $1581.22 and the lowest at $1564.40, and is expected to remain very volatile ahead of the data today. Gold trades now around $1573.65 per ounce.
Yesterday, pessimism hit the market sharply after yields on Italian bonds reached to the highest record since 1997, which sent the euro below the 1.3000 level and in result spread panic in the market and losses across the board, which led traders to liquidate their positions on gold in order to cover the huge losses, after the U.S. dollar hit the highest recorded in 2011, and in result sent the euro to the lowest.
The U.S. dollar index (USDIX) is trading above the 80.00, which forced more downside pressures on commodities, currencies and metals to trade lower. In addition, OPEC agreed yesterday to increase the daily output of oil to 30 million barrel, which sent the oil lower and in result forced more pressures on other commodities.
Metals are expected to fluctuate heavily and will remain very volatile today, yet the incline seen now is only a correctional move, yet metals are expected to continue the downside movement in general.
Europe remains the main focus in the market after the European summit failed to quell jitters and restore confidence, where investors as we mentioned before looked at this make-it or break it summit with hopeful eyes that leaders will finally provide a comprehensive plan to tackle the debt crisis once and for all, yet leaders disappointed markets with the few measures taken and ruling out the European Central Bank role.
Yesterday, the German Chancellor, Angela Merkel in attempts to ease market tension said that the euro area is able to tackle the debt crisis and it will yet patience and commitment is needed. However, the sentiment remained fragile and didn't improve as we saw the euro losing strength after the comments and closed the session with huge losses.
Today, Fitch Ratings downgraded the credit rating of five major European banks as a part of a boarder review for largest banks ratings, where those banks are exposed to the European sovereign debts and due to the rising risks that threaten the banking industry, the agency saw to lower the credit ranking of those banks.
Moreover, markets are tensed ahead of the heavy load of fundamentals awaited from Europe and the United States today, where European macroeconomic data are expected to add more pressures as the manufacturing and services sectors are expected to contract further, while retail sales are expected to drop in the United Kingdom despite the Holiday season, while inflation in Europe are expected to remain unchanged at 3.0%.
Among other precious metals, silver started the day at $28.85 per ounce, and recorded a high of $29.17 and a low of $28.08 and is currently hovering around $28.43, extending the losses recorded earlier this week.
Platinum lost 1.48% or $21.00 after the opening of $1421.00 per ounce, to currently trade around $1400.00, after recording the highest at $1427.00 and the lowest at $1378.50 per ounce.
Palladium however, gained 0.32% or $2.00 after the opening of $618.25 per ounce, to currently trade around $620.25, after setting a high of $622.13 and a low of $615.25 per ounce.