Gold gains momentum on eased fears over Greece
Another week started today; however this time optimism dominates the market as Greek lawmakers have finally reached to an agreement on the further austerity needed to avoid a catastrophic default, where the shiny metal rebounded to the upside after the U.S. dollar eased as few investors hold the low yielding currency now for risk aversion.
Gold started the session today at $1722.00 per ounce, and advanced so far 0.49% of $8.40 per ounce, to currently trade around $1730.40 per ounce. The metal recorded the highest at $1734.57 and the lowest at $1720.22 an ounce.
The shiny metal declined sharply on Friday after the strengthening U.S. dollar forced downside pressures on the metals in general, in addition to commodities and other currencies, to close the New York Session on Friday with losses.
On Friday, the shiny metal declined sharply during the European session reaching the lowest at $1704.75 per ounce; however, the metal recovered more than a half of the losses incurred after reports showed that Greek parliament is set to vote on the austerity plan set by Papademos's government on Sunday, which led investors to return and demand the shiny metal as a hedge against uncertainty on fears the Greek parliament could reject the plan especially with the widespread strikes across Greece.
The Greek parliament took a step forward yesterday and confirmed the commitment to austerity and the European common currency, where the Greek parliament passed new round of austerity worth 3.3 billion euros in order to secure the second bailout package worth 130 billion euros needed to avert default in March when the nation will pay back around 14.5 billion euros of maturing bonds.
The 3.3 billion euros package of wage, pension and job cuts is surely another pain to the economy. The austerity measures include layoffs of 15,000 workers, reduction in minimum wave of 22% and also pension cuts which pave the way for the nation to secure the funds to avoid an outright default on March 20 when it has to payback 14.5 billion of maturing debt.
The vote from the Greek parliament could have eased tension in the market and spread optimism; however, our next stop will be on Wednesday at the euro zone finance ministers' meeting, where policy makers are expected to approve the second bailout package for Greece.
Moreover, the CME Group lowered margin requirements needed to trade commodities, including gold, silver, platinum, iron-ore, steel, copper and light sweet crude oil contracts, where the new margin requirements will be lowered for gold by 12%, for silver 14%, for copper 13% and finally for crude oil by 9%. The new rates will be effective after Monday closing, which attracted some demand for the shiny metal which lost the appeal as a safe haven against the U.S. dollar after the group raised margin requirements several times in the past period.
Among other precious metals, silver added 0.90% or $0.30 per ounce after the opening of $33.58 per ounce, to currently trade around $33.88 per ounce. The metal set a high of $33.91 and a low of $33.55 an ounce.
Platinum added so far around 0.26% or $4.25 per ounce to the opening price of $1659.50 per ounce, to hover now around $1663.75 per ounce. The metal recorded the highest at $1667.75 and the lowest at $1656.50 per ounce.
Palladium gained 0.36% or $2.50 to $705.25 per ounce, after recording the highest at $707.00 and the lowest at $701.75, noting that the metal opened the session today at $702.75 per ounce.