Gold inclines as a hedge against uncertainty
As this year started, uncertainty is dominating the market and the sentiment is still shaky, while confidence is still fragile, where investors are still looking forward to the European summit at the end of this month to track the implementation of the measures taken earlier and to weigh the procedures approved to fight the debt crisis, where markets were disappointed more than once and now all European nations must convince markets will an appropriate plan to tackle the debt crisis and prevent the contagion from spreading further.
For gold, the metal is known to be a hedge against uncertainty, where investors usually hold more of the shiny metal in the time economic conditions are highly uncertain in order to protect their wealth, and now with the current situation in the market, European leaders didn't provide a complete-detailed plan to heal the debt crisis, while the European Central Bank is unable to contain the crisis or at least save the financial sector, and in result gold gains momentum as fears are still dominant in the market.
Gold opened the session today in Asia at $1611.60 per ounce, and recorded the highest at $1625.18 and the lowest at $1610.18, and is currently trading with 0.78% gains around $1624.23 per ounce.
Yesterday, gold inclined sharply despite the downside pressures forced by the strengthening U.S. dollar, where after the ECB reported that the overnight deposits increased again to all-time record, pessimism extended in the market due to the rising fears that ECB will be unable to shield the financial sector and will not be able to maintain financial stability, where after the bank provided unlimited cheap funds for euro-area banks, fears are still preventing them from lending each other , as they prefer to deposit the additional fund at the ECB and get lower yields rather than lending each other on profitable yields.
Today, the metal gained more momentum after the opening in Asia, where the metal is demanded ahead of the French bond auction, where France is to sell 8-billion euros of bond in the first auction taking place in 2012, where all eyes will be concentrated on the bond sale as France is to be under test with rising threats from rating agencies that the nation could loose its top credit rating of triple A's.
Among other precious metals, silver inclined today recovering some of the losses incurred yesterday, where the metal declined sharply in the past session affected by fears and the pessimism seen in the market, which affected investors' appetite for risk and is result affected demand for silver as well.
Silver added 1.33% or $0.3875 per ounce after the opening of $29.28 per ounce, to currently trading around $38.56. The metal recorded a high of $29.62 and a low of $29.13 per ounce.
Platinum also advanced 0.92% or $13.00 per ounce today after the opening of $1429.00 per ounce, to currently trade around $1431.75. The metal reached the highest at $1433.88 and the lowest at $1416.50 per ounce.
Palladium as well gained momentum after the opening today, where the metal gained $4.00 per ounce or 0.62% to currently trade around $652.50 per ounce, after opening the session at $648.50. The metal set the highest at $658.00 and the lowest at $646.50 per ounce.