After yesterday's $10 drop, gold was able to steady today in the Asian session despite recording a low of $807.20 per ounce earlier in the trading session. The appeal as an alternative investment has decreased on the metal after the abysmal retail sales data released yesterday from the US economy resulted in investors switching their demand to lower yielding currencies as they were buying the US Dollar alongside US Treasuries as a way to secure their investments. The yellow metal remains trading around the $812 per ounce level currently after the fall in crude prices were slightly halted while the dollar continued to trade sideways against majors in the markets.
Adding more downside pressure to the metal was the fall seen in crude prices that resulted from a government report released yesterday indicating that demand for crude in the world's largest oil consumer plummeted to an extent that it sent US stockpile inventories to a 16 month high. The EIA report showed crude inventories were up 1.14 million barrels, the highest since August 2007; allowing the contract to shed $0.50 per contract yesterday. As trading started today, we see that crude continues to slide for the second straight day reaching a low of $36.13 per barrel up till the hour of this report.
Concerning the US dollar, the slump in retail sales yesterday resulted in the weakening of the currency in the markets at first but losses were pared later in the session as investor's fears drove them to purchase more US Treasuries. Today we see the dollar somewhat steady in the markets and still trading near a five week low versus the Euro as markets await for the ECB rate decision where speculations are for a 50 basis point cut. Still on the queue from the US economy are initial claims for the previous week where expectations show further weakening in the labor market whereas prices from the producer's side are seen to have cooled in December.