Gold to extend the losses on a strong dollar and eased debt-concerns
Gold declined sharply to the downside yesterday as expected, while today the metal might continue the sharp reversal as the strengthening U.S. dollar forced downside pressures on commodities to trade lower. Furthermore, eased fears and debt-concerns reflected negative demand for the safe haven, which set a record almost at $1921.00 in August supported by the escalating debt crisis and euro-collapse fears.
Gold shed so far around 0.25% or $4.10 per ounce, trading currently around $1670.00 per ounce, after starting the session in Asia at $1674.10 per ounce. The metal set so far a high of $1682.60 and a low of $1668.60 per ounce.
The U.S. dollar continues to trade higher as the wheel of time keeps on turning, where the strong pace of recovery seen in the world's largest economy sent the currency higher on better growth projections and no signs of further easing needed, especially after the unexpected improvement seen in the labor sector and other sectors as well.
In result, the yellow metal reversed to the downside, with expectations the metal is overvalued, noting that gold was able to set several new records since last May on debt fears and concerns. Now the debt crisis seems to be under control and by time we can see that European lawmakers are providing more measures and steps to end the debt crisis once and for all, highlighting the most important move, the Greek second bailout deal, which was approved after the debt-swap transactions.
The U.S. dollar inclined sharply yesterday after the better than expected retail sales index, which reflected improvement in spending stance, which is surely driven by the improvement seen in the labor market, which provided more disposable income.
The Federal Open Market Committee (FOMC) left rates as they are in order to spur growth and recovery. However, the Federal Reserve clarified that the economy is gaining momentum, the thing that added strength to the U.S. dollar and sent metals south.
Yesterday, Fitch Ratings, the third largest rating agency in the world, upgraded Greece's long-term credit rating to B- from restricted default with a stable outlook, after the nation stroke a successful debt swap-deal with the private sector, which in result relieved the nation from 100 billion euros of debt.
Among other precious metals, silver also declined today, cutting so far 0.96% or $0.32 per ounce, trading now around $33.09 per ounce, compared with the opening of $33.41 per ounce. The metal recorded a high of $33.45 and a low of $32.98 an ounce.
Platinum however gained 0.13% or $2.25 per ounce to currently trade around $1691.00 per ounce after the opening of $1688.75 per ounce. Platinum reached a high of $1703.75 and a low of $1686.50 per ounce. Platinum advanced on growth projections released by S&P which expects China to growth by 8.3% in 2012. Therefore, the metal gained on growth projections to finally overcome gold again.
Palladium moved in line with other metals, cutting so far 0.60% or $4.25 per ounce to $701.50 per ounce, compared with the opening of $705.75 per ounce. The metal recorded the highest at $709.25 and the lowest at $700.75 per ounce.