Gold extends the gains as the market anxiety eases ahead of ECB’s LTRO
Gold gained momentum yesterday after the strong economic data from the United States and Germany, while the successful bond auction in Spain came to add more positivity to the market, easing the pressures forced on the metal to trade higher after the low yielding U.S. dollar lost momentum since investors' appetite for risk improved.
Gold started the session today in Asia at $1615.37 per ounce and recorded the highest at $1631.22 and the lowest at $1614.58 and is currently hovering around $1630.13 per ounce, extending the gains recorded in the past session.
Technically, consolidation above 78.6% Fibonacci correction of the downside move, which started from the top of $1920.86 and ended at the bottom of $1532.30, is affecting the pair positively, where we expect gold to extend the upside move to test the critical resistance level at $1635.00 during the session today. A breach of this resistance could trigger more upside move; however, stability above the mentioned correction at $1615.20 is necessary for our positive outlook to remain valid.
Today, the metal extended the gains recorded yesterday, as optimism is still dominating the market, where all eyes are looking forward to the European Central Bank's long-term refinancing operations (LTRO), as the Bank will offer unlimited 3-year loans will full allotment for banks in order to ease market tension and support the financial sector to recover slightly, where the European Bank aims to provide unlimited liquidity to the market in order to prevent an interbank lending freeze and a liquidity crunch from worsening the outlook further.
The U.S. dollar lost strength yesterday after the cheerful data from Germany and the United States, where the German IFO survey showed that the German confidence unexpectedly improved, which supported the sentiment to improve, while the better than expected U.S. housing data supported the optimism to last.
Gold gained after optimism dominated the market, where during the last period, investors tended to liquidate their gold positions in order to cover the losses seen across the board when the U.S. dollar gained the most, while the metal lost more momentum after CME and Shanghai Exchange raised margin requirements on gold futures in order to control the rapid incline seen when investors held a lot of gold as a hedge against the European debt crisis.
However, gold was affected negatively after the movements from market regulators, while the U.S. dollar benefited the most from the pessimism and fears seen in the market; however, the optimism seen in the market did the opposite effect and supported gold to recover some of the losses incurred this month and the U.S. dollar to reverse to the downside, where a depreciation in the value of the dollar is usually seen as an improved appetite for riskier high yielding investments, where the currency usually acts as a safe haven in time of market tension and anxiety.
Among other precious metals, silver opened the session today at $29.51 per ounce, and recorded the highest at $29.78 and the lowest at $29.43 and trades in the moment around $29.77, extending the gains seen yesterday.
Platinum advanced as much as $13.25 per ounce of 0.92% after the opening of $1433.25 per ounce, to currently trade around $1446.50. The metal recorded the highest at $1447.50 and the lowest at $1430.75 per ounce.
Palladium gained $5.25 per ounce or 0.84% after the opening of $628.00 per ounce, to currently trade around $633.25, after setting a high of $633.50 and a low of $623.50 per ounce.