Gold to gain due to rising uncertainty
With the start of this week the shiny metal returns to gain momentum, where we can see the metal advanced since the opening in Asia, supported by demand as a hedge against uncertainty, where investors and markets in general are still waiting the euro-zone finance ministers' negotiations over Greece to end as time is running out and the nation approaches default.
Gold advanced so far 0.36% or $6.23 per ounce to $1729.60 per ounce after the opening of $1723.37 per ounce, recording the highest at $1737.18 and the lowest at $1726.35 per ounce. We expect the metal to decline before extending the upside move as markets should correct the gains and retest the opening gap seen before extending the bullishness.
Gold is biased to the upside and could extend the gain ahead of the continued European negotiations over the uncertain Greek financial situation and the second bailout deal, where Greece has finally met all the requirements needed to become eligible for the financial aid and now eyes will be focused on the finance ministers whether to approve the 130 billion euros for Greece or new arrangements will be presented.
The bullish opening gap seen in the currencies market also supported gold to record more gains, where the low yielding U.S. dollar opened lower with the start of this week as optimism dominated the market after the Chinese Central Bank cut reserve requirements ratio again in order to spur growth and lending, which eased tension and relieved markets ahead of the resumed Greek debt-talks.
The People's Bank of China announced during the weekend that it will cut the reserve requirement ratio for large and small financial institutions by 0.5% to 20.5% and 18.5% respectively.
Several positive events and news over the weekend supported markets to open higher today, where in addition to the People's Bank of China's announcement of cutting reserve ratio, China and Japan also agreed to boost International Monetary Fund's capacity in attempts to increase the fund's ability of fighting the European debt crisis through supporting indebted nations to prevent the contagion from spreading further.
Moreover, the European Central Bank Executive Board member, Joerg Asmussen, told German business daily Financial Times Deutschland in an interview today that Greece is thankfully not a threat to the world economy, clarifying that euro area finance chiefs meeting today will pay out as they will reach to an agreement and end the conflict over the second bailout and the debt restructuring plan.
Commodities rebounded today after reports released by the Joint Origination Data Initiative (JODI) showed that Saudi Arabia lowered oil production and exports in December, according to an official source of oil production, consumption and export data.
The Iranian Ministry of Petroleum declared yesterday that the nation halted sales of crude to the United Kingdom and France; however, reports showed that France imports around 3% of oil from Iran, while the United Kingdom imports less, according to the BBC.
Among other precious metals, silver also added 0.55% of $0.18 per ounce after the opening of $33.18 an ounce, trading now around $33.36 per ounce. The metal reached a high of $33.69 and a low of $33.32 per ounce.
Platinum also added 0.54% or $8.75 per ounce, trading now around $1642.00 per ounce after the opening of $1643.25 per ounce. The metal recorded so far the highest at $1658.00 and the lowest at $1636.25 per ounce.
Palladium started the session today at $685.75 per ounce, and is currently trading around $690.00 per ounce with 0.62% or $4.25 per ounce of gains. The metal set the highest at $696.00 and the lowest at $688.00.