Gold prices retreated on Thursday as the initial optimism over the fiscal cliff deal subsided and as the White House and Republicans prepared themselves for further heated rounds of talks on unresolved issues in next two months. Silver prices also edged lower on Thursday.
At around 6:15 a.m. EST, gold futures for February delivery edged down 0.43 percent to $1,681.60, while spot gold fell 0.33 percent to $1,681.0 an ounce.
On Wednesday, both spot gold and gold futures climbed 0.8 percent, tracking strong gains in global equity markets and other commodity markets. Gold, which is considered as a safe-haven instrument, tends to gain in the backdrop of economic uncertainty; however, in the recent past it has moved in tandem with riskier assets.
Although the Congress approved a bill approving higher taxes on affluent individuals, many other issues such as long-term spending cuts on defense and domestic areas, and a decision on debt ceiling issue, remain unresolved. Until these issues are resolved, market sentiment will remain edgy.
Also, metal analysts say that gold is range-bound and to break above $1,700, it will need to first test strong resistance at $1,695 an ounce level.
In a note to investors, Brian Lan, managing director of GoldSilver Central Pte Ltd in Singapore, said, “Precious metals are currently tracking equities, however they are stuck within the next trading range. For gold, it will need to breach $1,695 before it can actually have another upward trend to break above $1,700.”
Holdings in SPDR Gold Trust Fall
A data provided by Reuters showed that holdings of SPDR Gold Trust (ETF) (NYSE: GLD
), world’s largest gold-backed exchange traded fund, dropped by 0.07 percent to 1349.92 tons as of January 2, Wednesday from 1350.82 tons on Monday.
Silver futures slipped 0.23 percent to $30.94 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV
) was down 0.03%.