Precious Metals Fundamentals: February 2, 2012

The shiny metal advances ahead of the French-Spanish bond auctions

Gold returned to continue the upside journey today, to currently trade around the highest level recorded in eight weeks on optimism that sent the U.S. dollar to the lowest record seen in more than two months ahead of the bond auctions awaited from Spain and France today and also as markets are still tracking any developments in the Greek talks with the private sector.

Gold started the session today at $1743.40 per ounce, and added so far 0.23% of $4.00 per ounce, to currently trade around $1747.00 per ounce, after reaching the highest at $1751.97 and the lowest at $1743.05 per ounce.

Investors also are holding more of the shiny metal ahead of the critical fundamentals awaited from the world's largest economy tomorrow, where all eyes are focused on the U.S. jobs report, especially after the ADP employment report yesterday showed that the private sector added less than expected jobs to the U.S. economy.

The sentiment improved in January on eased market strain and jitters, and also after the European summit met expectations and leaders unusually provided markets with enough details on how European nations plan to overcome the two-year debt crisis.

However, the only issue still unsolved is the Greek deal with the private sector over the percentage haircuts on the existing Greek debt and also over the coupon rate to be paid on the new bonds issued in exchange for the current Greek debt; however, Bloomberg News reported that Greece could reach an agreement soon with the creditors, meanwhile the Greek Prime Minister said that there are some difficulties in the negotiations, yet he added that discussions are still under progress and a deal could be reached by the end of this week.

Today, Spain and France are to sell bonds with different maturities, while investors will still track the bond sales despite the improvement seen in the borrowing costs and the demand for European indebted bonds, as markets are still looking forward to the yields to decline further or at least to remain low.

Spain will auction 3.8% 2017 bonds, 4.25% 2016 bonds and 4.0% 2015 bonds, while France will auction bonds of 4.25%, 2.5% and 3.0% due in 2018, 2020 and 2022 respectively, noting that the percentage figures represents the coupon rate paid on these bonds.

Among other precious metals, silver is currently trading around the opening level of $33.69 per ounce, after fluctuating heavily between the highest level recorded at $33.98 and the lowest level recorded at $33.57 per ounce.

Platinum however advanced 0.17% of $2.75 per ounce to currently hover around $1621.00 per ounce after started the session at $1618.25 per ounce. The metal set a high of $1625.75 and a low of $1615.99 per ounce.

Palladium surged 0.11% or $0.75 per ounce after the opening of $696.50 per ounce, recording a high of $699.50 and a low of $694.45 and is trading in the moment around $697.25 per ounce.