Gold to gain ahead of the critical fundamentals from Europe

Gold started the session today biased to the upside, where the metal is demanded heavily as a hedge against uncertainty ahead of the critical fundamentals from Europe, where all the focus will be on the gross domestic product figures from the euro zone, and the unemployment report from the United Kingdom.

Gold started the session at $1721.17 per ounce, and gained so far around 0.44% or $7.50 per ounce, reaching now $1728.67 per ounce. The metal set a high of $1729.66 and a low of $1718.72 per ounce.

Some relief was seen in the market today after the German GDP advanced figures came better than expectations for the fourth quarter, where the seasonally adjusted index reflected 0.2% contraction from 0.6% expansion, beating estimates median of 0.3%. The European common currency rebounded to the upside after the news, while the metal also gained more momentum as the U.S. dollar dropped sharply; easing the pressures forced on the dollar-denominated assets to trade higher while investors are holding more of the metal as a hedge against uncertainty.

We expect the metal to continue the intraday upside move ahead of the critical fundamentals; however, and after then the metal should move in line with the general sentiment in the market as investors will no longer hold the metal as a hedge against uncertainty, yet they might liquidate their positions in case pessimism dominated the market in order to cover the expected losses, but in case optimism continued after the news the metal should move in line with the sentiment against the U.S. dollar.

Tension is seen in the market, while instability triggered strong demand for the shiny metal, where investors fear that the euro-area region could contract more than expected, which if confirmed, we expect Europe to be slipping into a deep recession rather than a mild recession.

In addition, eyes will be also tracking the inflation report for the Bank of England, where markets will track the report for more information regarding inflation projections and growth outlook in the United Kingdom. Gold is losing strength as a hedge against inflation as prices pressures started to ease across the globe with the economic activity slowdown.

Among other precious metals, silver gained 0.40% or $0.13 per ounce to $33.70 per ounce, after starting the day at $33.57 per ounce. The metal set a high of $33.76 and a low of $33.54 per ounce.

Platinum also surged today, where the metal opened the session at $1632.25 per ounce and recorded the highest at $1643.50 and the lowest at $1629.75 per ounce, and is currently trading with 0.35% or $5.75 gains around $1638.00 per ounce.

Palladium added today 0.22% or $1.50 an ounce to currently trade around $688.50 per ounce, after the opening of $687.00 per ounce. The metal reached a high of $693.75 and a low of $686.00 an ounce.