Stock Market Watch

Gold Prices Settle Higher

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Gold prices settled higher in trading on Friday amid hopes of a possible bailout of Spanish banks. Gold prices had fallen sharply earlier in the day after the Federal Reserve Chairman Ben Bernanke on Thursday gave no indications of further monetary easing in the U.S.

Gold had been gaining momentum since last Friday after a weak jobs report raised prospects of further monetary easing by the Fed. However, hopes of QE3 were dashed after Bernanke’s comments on Thursday.


Speaking to Reuters, Gianclaudio Torlizzi from T-Commodity said that the fact that the Fed did not hint at monetary easing has weighed a lot on gold, and of course in this scenario of risk aversion, the inverted correlation with the dollar was restored and is having an impact today.

Torlizzi said that the outlook for precious metals in the medium-term, however, remains positive because the central banks will have to undertake an expansive monetary policy sooner or later. He added that central banks are just waiting for the right time as they don’t want to use the last cartridge too soon.

Gold continued to slide in early trading on Friday. The precious metal was lifted by reports that Spain was likely to ask for help for its struggling banking sector soon. The report immediately lifted gold and other risk assets.

At last check, spot gold prices were trading 0.2% higher at $1,592 an ounce. Earlier in the day, spot gold prices fell to $1,561.44 an ounce, the lowest level in a week.

Gold futures for delivery in August on the Comex division of the New York Mercantile Exchange rose $3.40 to settle at $1,591 an ounce.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.15% higher at $154.73, the Market Vectors ETF Trust (NYSE: GDX) ended the day 0.74% higher at $46.33, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.26% higher at $15.54.

For the week, the SPDR Gold Trust fell 1.76%, the Market Vectors ETF Trust fell 0.71%, and the iShares Gold Trust fell 1.52%.

In a research note, Marex Spectron said that now that the QE premium has exited the price over the last two days, the risk-reward looks favorable, particularly against base metals. Marex Spectron said in the note that for the first time this year, it favors owning gold and the reason is relatively simple-positioning. It noted that short positions have been building in gold all year, and it has been on its watch-list and now those short positions appear to have peaked.

But, concerns still remain about the euro zone. If the situation in the euro zone worsens gold could come under pressure. Investors will be watching developments over the weekend.

In other precious metals, silver fell on Friday. At last check, spot silver was trading 0.3% lower at $28.49 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 0.14% lower at $27.75, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 0.24% lower at $41.60.

The ProShares UltraShort Silver (ETF) (NYSE: ZSL), which takes a short position on silver, fell 0.30% to finish at $63.32 on Friday.

For the week, the iShares Silver Trust rose 0.76%, the ProShares Ultra Silver rose 0.41%, and the ProShares UltraShort Silver dropped 2.73%.

Platinum and palladium also fell on Friday. Spot platinum fell around 0.3% to $1,430.24 an ounce, while spot palladium fell 1.1% to $611.47 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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