Gold to gains some momentum, markets assess the ECB large refinancing operations
Yesterday, gold reversed to the downside giving up the gains recorded earlier, where the European Central Bank provided more than expected liquidity to the euro-area banks, which left mixed sentiment in the market, as investors are weighing the Central Bank's move and linked it to the escalating debt crisis.
Today, gold started the session weak and is currently trading below the opening level, yet the metal could incline to the upside as markets are rebounding and investors' risk for appetite could improve slightly today, which in result could weaken the U.S. dollar and ease pressures forced on the dollar-denominated commodities to trade higher today.
In addition, gold could gain ahead of the Italian vote today, where the Upper House of Senates is to vote on the austerity package provided Monti's technocratic government. The vote is expected to pass through the Senators today as Italy without applying further austerity the country will surely be the next victim of the debt crisis.
Gold opened the session today at $1614.68, and recorded the highest at $1615.79, and the lowest at $1601.99, and is currently trading around $1611.20 per ounce.
Technically, gold is currently trading below the exponential moving averages 50 and 200, and also below 23.6% Fibonacci correction of the downside movement, which started from the top of $1920.86 and ended at the bottom of $1532.30. However, the metal trades above the psychological level of $1600, and also above the main ascending support level at $1562.00. Therefore, a breach of the mentioned correction and consolidation above the moving average 200 suggests that the metal could extend the incline towards 38.2% Fibonacci correction at $1680.00. Stability below $1600 could trigger more downside movements.
Yesterday the European Central Bank offered the euro-zone banks with unlimited three-year longs in order to provide financial stability and empower the banking sector, where fears are existed in the market that Europe could face a financial shock, and the bank in attempts to quell jitters and indirectly fight the crisis provided markets with liquidity to avoid an interbank lending freeze, as banks should start recapitalizing their financial position in January.
As this year comes to an end, gold started to loose momentum in general and is still expected to decline over short-term basis, where demand for the metal as a hedge against inflation eased, inflation projections for the coming year is to the downside and the global slowdown should confirm this, where major central banks projects inflation to fall sharply in the coming period as growth is slowing and the European debt crisis is worsening, thus the pace of recovery if it was able to accelerate, the momentum will be very weak.
Among other precious metals, silver opened the session today at $29.33 per ounce, and recorded the highest at $29.62 and the lowest at $28.97, and is currently trading around $29.59.
Platinum gained $5.00 or 0.35% after the opening of $1428.50 per ounce, to currently trading around $1433.50, after recording the highest at $1435.00 and the lowest at $1418.50 per ounce.
Palladium however lost 0.20% or $1.25 after the opening of $635.75 per ounce, to currently trade around $633.50. The metal set the lowest at $625.50 and the highest at $637.75 per ounce.