Stock Market Watch

Gold Prices Little Changed

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Gold prices were little chnaged on Tuesday as the metal hovered around $1,680 an ounce mark as market participants keenly awaited cues from U.S data following recent hints from the Fed Chairman Ben Bernanke that the central might provide more stimulus to the economy. Earlier, the Fed’s recent hint of monetary stimulus propelled the bullion to its record one month high.

On Monday Bernanke said that it’s too early to celebrate the economic recovery. He also stated that to bring down the unemployment level, the Fed will take all possible options, possibly hinting at another round of bond buying program, (QE3).


Following the statement, gold prices rose sharply as expectations of further monetary easing buoyed market sentiments towards gold – most preferred hedge against the inflation.

Carsten Fritsch, analyst at Commerzbank, told Reuters on Tuesday that the Bernanke comments suggesting the possibility of further quantitative easing of monetary policy pushed the U.S. dollar lower and financial markets in general upwards and so also gold.

Fritsch also said that the prospect of further liquidity injections should put pressure on the U.S. dollar and the prospect of continued negative real interest rates should also keep the precious metal supported.

While spot gold stood almost unchanged, closing at $1,680.09 an ounce by 0307 GMT, after falling more than half a percent in the previous session; U.S. gold futures closed lower 0.3 percent at $1,680.10.

According to Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, “Bernanke was highlighting his uncertainty about the sustainability of the recent uptick in the U.S. data. He also believes that economic uncertainty would strengthen the bullion even further. Speaking to Reuters, he said “It is negative for the dollar and positive for expectations on stimulus, both of which should work in the advantage of gold.”

The U.S. consumer confidence took as serious beating due to higher gasoline prices. In fact, the U.S consumers were more worried about the inflation in March than anything else, in previous ten months.

Now, gold investors will keep an eye on series of economic data that are slated to be released over this week. Today, a data on February durable goods orders will be released. On Thursday, weekly initial jobless claims report will be closely watched, even as March Chicago PMI and University of Michigan March sentiment readings on Friday is keenly awaited.

Meanwhile, the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed exchange-traded fund, said its holdings fell down by 0.16 percent to 1,286.62 tons by Tuesday, after adding 6 tones, or half a percent, in the earlier session.

In Asia, prices of bullion remained largely unchanged despite a surge in earlier sessions as investors weighed Bernanke comments from past few days.

According to one Singapore based dealer, “People are not sure about what Bernanke has said and has not said, and they are waiting for more cues on prices”.

Jewelers in India, world’s biggest market for physical gold, continued with their strike; however, the government has agreed to relook at their demands for removal of an excise duty on unbranded jewelry, but won’t lower import duty on gold and platinum.

In some other precious metals markets, Silver closed lower 0.58 percent at $32.64 an ounce. Spot platinum edged up 0.60 percent at $1,652.49 an ounce, while spot palladium shed 1.3 percent to settle at $654.5.

Although platinum prices gained more than 18 percent this year after a poor performance in 201, it has   struggled to maintain the upward momentum as worries persist over  the struggling euro zone economy, a major market for platinum-heavy diesel auto catalysts.

 

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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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