Stock Market Watch

Gold Prices Rebound after Tuesday’s Sell-Off

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Gold prices gained on Wednesday as hopes for a Fed’s new asset-purchase program and better prospects facing Greece’s debt deal boosted investors’ risk appetite thereby ending three day losing streak.

Besides, U.S equities and oil prices also surged following major banks and pension funds decision to throw their weight behind Greece’s bond swap offer to private creditors, making it increasingly possible that the rescue package will go through without any glitches.


Spot gold gained 0.04 percent, closing at $1684.80, U.S. gold futures for April delivery climbed up $11.80 to close at $1,683.90.

In the U.S., bullion made a recovery on Wednesday as the U.S. Federal Reserve officials were considering a new type of bond-buying program designed to tame inflation. Earlier the metal dropped 6 percent since Wednesday last week, mainly due to fears that no monetary easing was likely to happen in near future.

While speaking to the CNBC, Axel Merk, portfolio manager of Merk Funds with $700 million in assets under management said “The Fed is going to be so busy managing the yield curve and it will forget to conduct sound monetary policy and to mop up this liquidity at some point”.

However, analysts fear that strong dollar can push back the bullion in the short term. Although the euro gained somewhat, concerns still remain whether Greece can avert the default by pulling up the bond swap deal.  Any bad news in this front can hurt the euro, putting selling pressure on the bullion. The metal tends to lose value as rising dollar, which makes commodities priced in the U.S. unit more expensive for other currency holders, and reduces the metal’s appeal as an alternative asset.

Meanwhile, yields on lower-rated euro zone government bonds increased  as investors’ sentiment towards riskier assets worsened, due to worries that Greece may not be able to get sufficient  lending support for its debt restructuring.

Europe’s equity markets were also trading lower in choppy trade as investors were worried about Greek debt and gloomy global economic growth prospects.

In gold’s physical market, world’s biggest gold purchaser, India continued buying gold as traders and dealers took advantage of lowest weekly price of the metal.  In China, world’s second biggest bullion market, buying was bit subdued.

In its note, UBS wrote “While dips have encouraged some buying from China, interest has been rather sporadic, instead of the consistent support that gold seems to need right now”. The bank also added “Our client flows were two-way and Shanghai Gold Exchange volumes for the two gold contracts have eased back to average levels.”

Gold ETFs also rose on Wednesday. The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.57% higher at $163.63, the Market Vectors ETF Trust (NYSE: GDX) ended the day 0.42% higher at $52.67, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.67% higher at $16.42.

Moving to some other precious markets, silver   edged up a bit by $33.39 an ounce, following a sharp plunge on Tuesday when it lost more than 4 percent, its largest one-day decline this year.

Silver ETFs also finished higher on Wednesday. The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 1.22% higher at $32.41, while the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 2.58% higher at $58.45.

Platinum and its sister metal palladium also slid in that session by the most this year, with former down more than 3 percent and the latter shedding 5.5 percent. However, both metals rebounded on Wednesday, with platinum climbing up 0.12 percent, closing at $1,627.50 an ounce and palladium edging up 0.36 percent, closing at $683.22 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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