The yellow metal extends the rally ahead of the critical rate decision today
The countdown has finally come to an end and now dear readers we are on the verge of the critical rate decisions awaited from the Bank of England, the European Central Bank and the Bank of Canada, which has in result added strength to the shiny metal to gain more momentum today and to extend the gains as more investors are demanding the metal now as a hedge against uncertainty before the mentioned rate decisions and also as the deadline for the Greek debt-swap deal ends today.
Gold gained so far 0.80% of $13.54 per ounce to currently trade around $1698.51 per ounce after starting the session at $1684.97 per ounce. The metal set the highest at $1699.32 and the lowest at $1683.20 per ounce.
Yesterday, metals advanced in line with expectations as optimism dominated the market on speculation Greece will be able to strike a swap deal today as more bondholders are accepting the terms and clarifying their willingness to participate in the campaign. In addition, the cheerful ADP employment report from the world's largest economy added more positivity to the market after the figure came slightly above expectations.
Today as we mentioned eyes will be focused on the Bank of England and the European Central Bank rate decisions during the European session and after then the focus will shift to the Canadian rate decision and the ECB press conference.
With the current expectations and projections the BoE, ECB and Bank of Canada are all expected to hold the monetary policy steady at 0.5%, 1.0% and 1.0% respectively; however investors are holding more of the yellow metal as a hedge against uncertainty on concerns one of the policy makers might surprise markets with an unexpected move, noting that the Bank of England current APF Decision (Asset Purchasing Facility) was not unanimous.
After then the European Central Bank President Mario Draghi will speak at the ECB press conference, clarifying why the ECB acted in line with the current monetary policy and whether the bank will add further tools to fight the debt crisis or not. In addition, the president is expected to explain the results and the effects of the second round of LTROs (Long-Term Refinancing Operations).
Greece then will attract all the attention in the market, where today Greece is set to meet the deadline of the debt swap deal -10:00 PM Athens local time-, while creditors that hold 60% of the existing Greek debt agreed to participate in the debt-swap campaign, supporting the largest restructuring in the history to successfully come into application.
Locally, the largest banks in Greece and most of the pension funds agreed to voluntary participate in the debt-swap program. In addition, more than 30 European banks and insurers including the Italian UniCredit, the German Commerzbank and finally the French BNP Paribas also joined the campaign, pushing the percentage participation to around 60% of the total bonds held by creditors.
The legal target for the swap is 50% of the bondholders to agree on the swap deal, but Greece needs 66% of investors holding the bonds to vote in favor of the deal in order for Greece to impose the so called CAC (collective action clauses), noting that above 90% private sector involvement in the deal is considered a voluntary deal and preferred by Greece and the European Union.
Among other precious metals, silver advanced as well today, adding so far 1.46% of $0.48 per ounce after the opening of $33.42 per ounce to trade in the moment around $33.90 per ounce. The metal recorded a high of $33.92 and a low of $33.33 per ounce.
Platinum recorded 0.81% or $13.25 of gains per ounce so far, after recording the highest at $1647.25 and the lowest at $1603.50 per ounce, to currently trade around $1643.75 compared with the opening level of $1640.50 per ounce.
Palladium added 0.58% or $4.00 per ounce to $690.75, after starting the day at $686.75 per ounce. The metal reached so far the highest at $691.96 and the lowest at $684.75 per ounce.