Gold declines on Pessimism and profit taking
Gold ended last week with slight gains, recovering some of the huge losses incurred a week earlier, where the metal rebounded sharply on Friday after reaching a low of $1677.10 per ounce as more investors started to hold more of the shiny metal as a hedge against uncertainty after the International Swaps and Derivatives Association (ISDA) declared a credit event trigger by Greece.
Gold was significantly biased to the downside on Friday affected by the strengthening U.S. dollar and liquidation transactions; however, the metal returned to gain momentum and incline after the announcement of the ISDA, which triggered around $3.2 trillion dollar of compensation for investors who hold Credit Default Swaps (CDSs), which attracted strong demand for the yellow metal as a hedge against uncertainty as investors are weighing now the consequences of the credit event.
Gold declined so far 0.44% or $7.63 per ounce after the opening of $1713.65 an ounce to currently hover around $1706.02 per ounce. The metal set so far the highest at $1716.97 and the lowest at $1702.53 per ounce.
Pessimism hit Asian markets with the start of the session today after the Chinese trade deficit widened beyond expectations to record the largest deficit in almost two decades, affected by the unexpected significant increase in imports which expanded by 39.6% from the previous contraction of 15.3% in February. Exports increase at a slower than expected pace of 18.4%, accordingly the trade deficit reached $31.5 billion, beating estimates of $4.9 billion.
For the euro, the European common currency is mixed now and trading within narrow levels as investors are still weighing the effect of the credit event triggered by Greece and also as investors are still weighing the comments made by the Greek finance minister, Evangelos Venizelos, awaiting the euro area finance ministers to meet today in Brussels.
Gold declines as investors are taking profit on the metal ahead of the critical events awaited today, where Greece is to start debt swap transactions with the private sector, while the euro area finance ministers will meet in Brussels to discuss the Greek financial and political situation.
Among other precious metals, silver also declined today, extending the losses incurred last week, where the metal shed so far 0.98% or $0.34 per ounce to $33.93 per ounce. The metal recorded the highest at $34.41 and the lowest at $33.82 per ounce, noting that silver started this week at $34.27 per ounce.
Platinum shed $7.00 per ounce of 0.42% to currently trade around $1677.50 per ounce, after recording a high of $1690.00 and a low of $1673.00. The metal opened the session in Asia at $1684.50 per ounce.
Palladium surrendered 0.60% of $4.25 per ounce to trade in the momentum around $704.00 per ounce, compared with the opening of $708.25 per ounce, the highest $705.50 and finally the lowest $701.75 per ounce.