Gold fluctuates heavily ahead of the Italian bond sale

With the start of the session today, gold is fluctuating heavily within a narrow range ahead of the Italian bond sale, where all eyes in the market are focused on the bond auction especially after fears eased slightly yesterday when Italy was able to run a successful bond sale after the several downbeat auctions seen earlier.

Gold opened the session today at $1555.50 per ounce and recorded the highest at $1561.00 and the lowest at $1543.51, and is currently trading around $1552.03 per ounce, and is expected to act in line with the Italian bond sale, where a successful sale could support the metal to rebound, while a failure is expected to trigger more bearishness, noting that the metal trades around the critical support level of $1533.00.

Yesterday, the metal declined sharply after the European Central Bank announced that its balance sheet widened to 2.37 trillion euros after pumping more liquidity for European banks last week, where lending to the euro-zone banks climbed to 879 billion euros as the Bank mentioned in a statement released today.

Overnight deposits at the European central bank climbed to all- time record of 452 billion euros, which raised concerns and fears in the market that European Bank didn't use the extra funds provided by the Bank, but they preferred to redeposit them in the Bank in order to benefit from the differences in yields, and in result ECB's additional fund was not pumped into the economy, hence the liquidity issue is still existed.

The U.S. dollar index inclined sharply yesterday after the announcement, where the euro declined sharply after investors flee to the low yielding dollar in order to avert as much risk as possible, especially when this year is coming to an end soon.

The strong U.S. dollar forced more downside pressures on the metal to trade lower yesterday, and still the metal is unable to record any gains today, where thin and choppy trading are affecting the metal in the time the lack of major fundamentals from Europe led investors to wait for the Italian bond auction.

Among other precious metals, silver opened the session today in Asia at $27.05 per ounce, and recorded a high of $27.13 and a low of $26.69, and is hovering in the moment around the opening level.