Gold collapsed to five-month low as the bearishness in markets after an Italian bond sale damped demand on shares and commodities. The shiny metal is still affected by the downbeat sentiment as it lost its basic characteristic as a safe haven, where the yen and the dollar became the most favorite refuges. Today, a bond selling in Italy saw a drop in yield of the 10-year notes to 6.98% compared with 7.56% in the previous auction while the 2014 bills recorded a drop in yields to 5.62% from 7.89% in Nov. 29 auction. However, the 10-year bills yield decline did not calm down the tensions as the rate is still considered high as it is still near 7%, the rate which triggered bailouts for Greece and Portugal. In addition, the ECB announcement on Wednesday remained to have effect on investor's risk appetite; the ECB said the balance sheet soared to 2.73 trillion euros, where lending to banks climbed to 879 billion euros in the week ended Dec. 23 on the back of last week's 489 billion euros three-year loans lent to 523 banks. The announcement raised concerns the ECB will continue its support to banks to avert a financial disaster. Moreover, data from the U.S. showed that initial jobless claims for the week ended Dec. 23 rose to 381,000 compared with the revised 366,000 a week before. On the other hand, the dollar firmness damped demand on all-dollar-denominated commodities. The dollar index, which tracks the greenback's movements versus six major currencies, is currently hovering around 80.70 compared with the day's opening of 80.48. Spot gold is currently traded lower around $1535.20 an ounce after recording a high $1561.12 and a low of $1522.50. The shiny metal is relying a critical support level at 1530.00 as the breach of this level would trigger further decline. Crude oil also fell from six-week high to trade $99.58 a barrel compared with the day's opening of $99.45. |
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