Precious metals declined sharply on Monday as a new week begins, where the general pessimism, the high level of uncertainty and the huge losses seen across the board have led investors to liquidate their positions mainly on gold, and also on silver and platinum in order to cover the widely spread losses. Gold slumped today after opening the session at $1652.00 per ounce to reach the lowest at $1532.40 an ounce, but then rebounded to the upside and recovered some of the huge losses to currently trade around $1590.00 an ounce. The metal set the highest at $1662.83. Asian stocks declined sharply in the session today, as we expect the pessimism to extend and affect European equities, as the high level of uncertainty and growth expectations in addition to rising debt woes in Europe have triggered a panic wave, which led the massive selloff seen in the market. Moreover, Exchange Operator CME Group is to raise collateral requirements for gold and silver futures as the Group said in an Email after the end of the session on Friday, which have affected demand for metals, where holding gold and silver became more expensive and investors will find the metals less attractive than other investment. The group has mentioned in the Email that margins for gold will be raised by 21%, while margins for silver will be raised by 16% while for copper it will be raised by 18%, starting from Tuesday, where the Group tends to anchor metal markets after the huge movements seen in the past period. The dollar strength has affected the shiny metal, where the dollar index reached the highest level in more than eight months today, forcing more downside pressures on dollar-denominated commodities; however, the dollar is not the only reason behind this massive selloff, where investors expected the Federal Reserve to announce another round of quantitative easing after the Federal Open Market Committee’s meeting for two days that ended on Wednesday and the new measures are not seen as bearish on the dollar as QE would have been. On the other hand, the “operation twist” announced by the Fed triggered more strength and led the dollar to trade higher in the time expectations for quantitative easing should force the dollar to trade negatively, which reflected a panic wave, and led investors to cover their losses by liquidating their positions on metals. Silver also declined sharply after opening the session today at $30.65 per ounce and set the lowest at $26.04 an ounce, however, silver also rebounded positively to currently trade around $29.19 after setting a high of $30.85 per ounce. Among other precious metals, Platinum also slumped sharply today and is currently trading around $1523.88 an ounce, down $93.00 from the opening level and also lower than the shiny metal, which covered some of the losses seen earlier. |
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