Stock Market Watch

Gold Prices Settle Lower

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Gold prices fell in trading today as investors remained focused on developments in the euro zone. Gold prices rose in trading earlier today, however, the precious metals shed its gains after Germany and France cautioned Greece that it will get no more bailout funds until it reaches an agreement with creditor banks on a bond swap.

The French President Nicolas Sarkozy and the German Chancellor Angela Merkel today met in Berlin to discuss the last month’s proposed deal to solve the euro zone debt crisis.


Gold is facing resistance around its 200-day moving average of $1,633 an ounce currently following a sell-off in late December that sent the precious metals briefly into a bear market.

Carolos Perez-Santalla, Precious Metals Broker at PVM Futures, told Reuters that there is so much bearishness in the market that gold prices would be much lower if it were not for the euro zone debt crisis and rising tensions between Iran and the West. Perez-Santalla also noted that fund selling ahead of expected index-rebalancing at the beginning of the year also weighed.

At last check, spot gold was trading 0.4% lower at $1,611.19 an ounce. Last week spot gold had posted its biggest weekly gain in five weeks.

Gold futures for delivery in February on the Comex division of the New York Mercantile Exchange dropped $8.70 to settle at $1,608.10 an ounce.

Analysts believe that rock-bottom interest rates and worries about the sovereign debt crisis in the euro zone and global growth should support gold prices in longer term. However, they note that the previous metal’s 10% decline in the month of December has fed doubts about prices can reach close to last year’s record high. Gold prices had touched a record high of $1,920 an ounce in September last year.

Walter de Wet, analyst at Standard Bank, told Reuters that gold is finding better support, but it has been very rangebound since the start of the year. The analyst added that physical demand for gold has improved but he does not think it will push the price much higher than $1,650 an ounce.

Technical analysts are monitoring whether gold can cross its 200-day moving average in the short-term. The precious metal fell below its 200-day moving average in mid-December.

Adam Sarhan, CEO of Sarhan Capital, told Reuters that gold’s 200-day moving average, a support it had held for three years, has now become a resistance. Sarhan noted that gold was likely to trade lower until it can break above that level.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.45% lower at $156.50, the Market Vectors ETF Trust (NYSE: GDX) ended the day 0.66% higher at $53.70, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.44% lower at $15.69.

Silver prices, meanwhile, rose sharply in trading today. At last check, spot silver was up 0.80% to $28.93 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 0.82% higher at $28.14, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 1.75% higher at $45.43.

The ProShares UltraShort Silver (ETF) (NYSE: ZSL), which seeks daily investment results that correspond to twice the inverse of the daily performance of silver bullion, ended the day 1.43% lower at $14.46.

In other precious metals, platinum rose 1.8% to $1,424.25 an ounce in trading today. Gold has maintained its historically unusual premium over platinum into January after hitting parity for the first time in two and a half years in August.

Palladium also rose in trading today. At last check, palladium was trading 0.3% higher at $614.30 an ounce.

 

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edliston
Post Written By: Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.


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Ed Liston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing.

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