Gold futures slipped marginally during Asian trading hours on Thursday as directionless bullion investors are refraining from taking fresh inflation hedge bets ahead of the fourth-quarter GDP data release from China on Friday whilst ambiguity over the continuation of Federal Reserve’s quantitative easing is also weighing on the sentiment. Silver prices have also edged lower in early trading on Thursday.
However, spot gold edged up on Thursday after the dollar index slipped against major traded currencies, making dollar priced commodities cheaper for holder of other currencies.
At around 6:00 a.m. Eastern, gold futures for February delivery slid 0.06% to $1,682.40 while spot gold gained 0.24% to 1682.90 an ounce.
On Wednesday, gold futures reversed two straight sessions of gains to end 70 cents lower at $1,683.20 an ounce. Some signs of economic recovery in the U.S have made bullion investors skeptical over the continuation of Federal Reserve’s quantitative easing. Fed’s Beige Book for January showed that the U.S. economy and consumer spending was gradually picking up while industrial production and capacity utilization also showed slight improvement, according to the Federal Reserve.
In this backdrop, there is widespread concern that Fed could halt its bond purchase program much earlier than expected.
If growth continues to be really good, it could shift central banks' bias from easing to tightening, which would not be good for the precious metals complex," said Jeremy Fries, commodity strategist at Societe Generale in Hong Kong in a note to investors.
Moreover, unresolved issues in Washington (spending cuts issue and debt ceiling), are creating an unnecessary uncertain macroeconomic environment, drying up the demand for inflation hedge asset. However, metal’s safe haven demand could burnish if political brinkmanship in Washington results in historic default from the world’s largest economy.
“Right now the market isn't sure which direction to go,” added Fries.
The ICE Dollar Index, a measure on U.S. Unit’s performance against a basket of six major traded currencies-- slipped 0.21% to 79.64 on Thursday (at last check) from 79.80 in late North American trade on Wednesday.
Silver futures inched down 0.16% to $31.49 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV
) was up 0.16%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ
) was down 0.04%.