Gold advances on optimism due to IMF loan for Greece
Gold declined sharply yesterday, confirming stability below the psychological level of $1700.00 per ounce, affected by less demand on eased fears in Europe, which dampened demand for the shiny metal as a safe haven, and also by the strengthening U.S. dollar, which settled above the 80.00 point level.
However, markets return today to correct some of the losses incurred yesterday, where the flow of strong macroeconomic fundamentals from the world's largest economy supported the super power's currency to advance on better growth prospects, reflecting negative demand for the euro, gold, other commodities and currencies in general.
Gold advanced so far 0.21% or $3.35 per ounce to currently hover around $1648.22 per ounce after the opening of $1644.87 per ounce. The metal set a high of $1649.18 and a low of $1636.25 per ounce.
Optimism spread in the market with the start of the European session today on speculation the International Monetary Fund will approve providing Greece with a loan worth around 28.0 billion euros, the thing that reflects confidence that Greece after striking a debt swap deal with creditors will commit to the austerity measures and spending cuts and will eventually emerge from the two-year debt crisis.
On the other hand, Fitch Ratings, the third largest rating agency in the world, threatened the United Kingdom with a possible downgrade over the medium-term in case the nation was not able to sustain the widening budget deficit in the coming years.
Fitch's announcement added some pressures on European markets; however, the impact of the warning, which suggested downgrading U.K's top credit rating of triple-A over the medium term, was not a bit of concern since most of the economic challenges facing the kingdom are driven by the debt crisis in the euro-are region, the United Kingdom best trade partner.
Turning to critical fundamentals awaited today and expected to affect the market; eyes will be focused during the European session on the Swiss National Bank Libor Target Rate, which is expected to remain at 0.00%, and then the attention will shift to the euro zone quarterly change in employment.
With the start of New York session eyes will track the weekly change in jobless and continuing claims and the critical Philadelphia Fed Manufacturing Index.
Among other precious metals, silver gained 0.26% or $0.09 per ounce to $32.28, compared with the opening level of $32.19 per ounce. The metal recorded so far the highest at $32.30 and the lowest at $31.98 per ounce.
Platinum gained 0.10% or $1.75 per ounce to $1675.00 per ounce, beating the yellow metal which trades around $1648.00 per ounce after closing the session yesterday higher. The metal set a high of $1677.00 and a low of $1660.50 per ounce. Palladium however shed 0.21% or $1.50 per ounce so far to $697.00 an ounce.