Gold declined sharply today in early trading; however, the metal rebounded sharply to the upside on news that the European Union considers expanding the European Financial Stability Facility, awaiting critical parliamentary votes from the euro area nations during this week on the agreed expansion back in July which kept the mixed sentiment evident. The metal rebounded today after reaching a low of $1532.40 per ounce to currently trading around $1614.20 per ounce. Noting that the metal opened the session at $1652.00 an ounce and recorded the highest at $1662.83. Moreover, the German Chancellor, Angela Merkel said on ARD television yesterday that implementing the agreement on expanding the European Financial Stability Facility is necessary to aid Greece and prevent the contagion to other countries in the zone. The economic and monetary affairs commissioner, Olli Rehn said that the euro zone could leverage the European Financial Stability Facility in order to support euro countries and to prevent the contagion risks. The current situation facing Europe remains highly uncertain, especially with the parliamentary votes from Germany, Finland and Slovenia, where the German Bundestag should vote on the EFSF expanded powers next Thursday on September 29, where this critical vote represents a major test for the German chancellor Angela Merkel. In addition, parliamentary vote is also expected during this week from Finland, and should be approved as the finance minister, Jutta Urpilaninen said. The chief also told the press that "I hope and I think it is likely that these changes will go through." The shiny metal could fluctuate heavily during the coming period, yet the metal is expected to recover some of the losses incurred today as demand for gold as a hedge against uncertainty should surge. The yellow metal’s movement today to the upside was limited to a certain level due to the CME announcement to raise margin requirements again starting from tomorrow’s session, where the Group said in an email that margins on gold futures will be raised by 21% and on silver futures by 16%. |
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