Gold declines on eased inflationary threats

Gold returns to decline again today, cutting the gains recorded in the past session, where the shiny metal is losing momentum as inflationary pressures and threats started to ease in line with the global slowdown, the thing that led investors to hold less of the yellow metal as a hedge against inflation.

Gold shed so far 0.61% or $10.20 per ounce to $1654.32, after recoding the highest at $1664.95 and the lowest at $1653.02, noting that the metal started the session today at $1664.52 per ounce.

Gold has proven through history that it is the best hedge against price changes, where gold prices move in line with other products, goods and services prices, hence the value of the metal is constant over time, compared with currencies which lose value against inflated prices.

Moreover, the low yielding U.S. dollar added more pressures on the metal to trade lower today, where every time the U.S. dollar gains value, the purchasing power of the currency increases, leading to less inflationary threats and pressures that in result trigger negative demand for the yellow metal, which also can be held as a hedge against the U.S. dollar itself.

Today, gold declines on those factors mentioned before, where inflationary pressures in the United Kingdom are expected to ease further this month reaching over annual basis to 3.3% from 3.6%, affected sharply by the global slowdown and most importantly the spending-cut plans adopted by the British government which attempts to trim the U.K. budget deficit.

The royal economy will release today the inflation-linked consumer price index and retail price index, the cost of living index, where the annual CPI and core CPI indexes are expected to retreat to 3.3% and 2.3% from 3.6% and 2.6% respectively.

Among other precious metals, silver also declined sharply today, cutting so far 1.24% or $0.41 per ounce, affected by the strengthening U.S. dollar and risk aversion. The metal is hovering now around $32.51 per ounce, compared with the opening of $32.92. The metal set a high of $32.97 and a low of $32.50 per ounce.

Platinum shed 0.37% or $6.25 per ounce to $1674.25 per ounce, after the opening of $1680.50 per ounce, recording so far the highest at $1681.50 and the lowest at $1672.00 per ounce.

Palladium also retreated sharply today, cutting 0.88% or $6.25 per ounce, trading now around $701.00, after recording the highest at $707.25 and the lowest at $699.45, noting that the metal started the session at $707.25 per ounce.