Gold gains momentum as markets rebound
After the decline seen on Friday, gold returned to gain momentum and recover some of the losses incurred in the past session, where the metal rebounded to the upside with the start of this week on hopes the expected downgrades in Europe should push European leaders to make more effort to handle the situation and tackle the debt crisis, especially after German Chancellor Merkel called on European nations to redouble their effort to pass this challenging year and resolve the debt crisis once and for all.
Gold despite the sharp decline on Friday was able to hold onto some of the gains recorded during the past week, where the metal after opening the past week at $1615.40 per ounce gained in the first four sessions and reached a high of $1661.93 after recording the lowest at $1604.86, yet the metal closed the week in New York on Friday in green at $1638.70 per ounce.
The effect of the downgrades was not meant to last; where markets expected that rating agencies could cut the credit rating of some European nations; however, the surprise was downgrading France and Austria top credit ratings of triple A's, yet markets returned to gain momentum today recovering the losses surrendered on Friday.
Today, the shiny metal started this week strong as investors hold more of the metal ahead of the French bond sale, where after S&P downgraded the French Triple-A ranking, markets are waiting for the bond auction today to track the impact of the downgrade on the French ability to access the capital market.
Gold added 0.43% or $6.15 per ounce to currently trade around $1645.15 per ounce after the opening of $1639.00. The metal reached the highest at $1645.41 and the lowest at $1631.50 per ounce.
Heavy fluctuations and volatility are expected across the board today due to the several comments from European decision makers, the French bond auction and the absence of the United States, which is celebrating Martin Luther King's day.
The German Chancellor Angela Merkel said after the downgrade in France that the downgrades seen across the euro zone should be an incentive for European leaders to speed up the implementation of the fiscal rules and finalizing the creation of the permanent rescue fund as soon as possible.
Moreover, downbeat news from Greece added pressures on the market and limited the rebound, where the Greek government still failed till now to reach a deal with the private sector on the 50% haircuts. In addition, Greece must complete negotiations with the International Monetary Fund and the European Union on the second bailout deal and the frozen tranche of the last bailout package; however, fears eased a bit after the Prime Minister, Papademos clarified that leaving the euro is not an option.
Moreover, Silver also gained today after the opening of $29.71 per ounce, where the metal surged 0.66% of $0.20 per ounce to currently trade around $29.91, after setting the highest at $29.92 and the lowest at $29.48 per ounce.
Among other metals, platinum also added $4.25 per ounce or 0.29% to trade now around $1493.75 per ounce after recording a high of $1496.88 and a low of $1474.75 per ounce, noting that the metal started this week at $1489.50 per ounce.
Palladium added 0.55% or $3.50 per ounce after the opening of $638.00 per ounce, to currently trade around $641.50. The metal hit a high of $641.50 and a low of $631.25 per ounce.