The precious yellow continued the bearish move since the morning as the global selloff gained momentum into the U.S. session on the dire outlook for the global economy. The metal lost the appeal against a ragging dollar and amid the heavy decline across the board as investors liquidated their haven holdings for cash to cover the losses. Gold is steady below $1,800 mark where gold started the day at $1782.30 leaving the high at $1789.00 and slumped heavily to currently trade at the intraday low around $1728.20 down nearly 4.4%. The Federal Reserve stimulus was short of expectations and the negativity only powered the dollar and triggered a wide selloff for commodities and accordingly pressured the metal south. The fear of the worsening outlook for growth was the tip of the iceberg today as downbeat data from China all the way to Europe only intensified fears of recession. The flash PMI manufacturing from China confirmed the slowing economic activity as the sector contracted and that was echoed from the euro area where both manufacturing and services activity contracted in September according to the advanced PMI estimate. This worsening sentiment pressured the metal instead of triggering haven demand as the liquidation seems more appealing at the high territories than safety, especially as the dollar extended the bullishness. The Dollar index rallied to as high as 78.80 and currently trading strongly bullish still adding 1.18% at 78.60. The agony is from slowing growth and from the nearing recession as the downgraded outlook for the U.S. economy was the final confirmation needed, especially as the stimulus was seen to do very little to alter the state of shrinking growth! More downside pressure for gold is from the massive selloff across the board, where the decline spread across stock markets with now the STOXX 50 down 4.52% at 2003.54 and the DJIA down 2.78% at 10815.94 with the start of the U.S. trading session. We can see the metal’s role as a haven now coming to the rescue as investors sell the metal for cash to cover the losses across the board and more volatility is expected as the metal approaches critical support areas! |
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