Gold Prices Extend Losses, Silver Prices Plunge More Than 1.50%

Gold prices continued extending losses on Wednesday as investors remained reluctant to take safe haven bets amid significantly improving U.S. economic indicators even as concerns over deterioration of the debt crisis in the euro zone eased. Silver prices also fell sharply in early trading on Wednesday.

At last check, U.S. gold futures for April delivery fell 0.22% to $1,592.20 an ounce while spot gold edged down 0.45% to $1,591.40 an ounce. Silver futures plunged 1.62% to $28.215 an ounce.

Earlier on Tuesday the Commerce Department’s durable goods orders data and S&P Case/Shiller’s home price index underpinned the fact that the U.S. economy was picking up the momentum.

In the backdrop, market participants are seeking high yielding assets such as equities, drifting away from gold.

Gold, which is generally considered as a safe haven asset, tends to be under pressure when political and economic outlook looks stable.

Besides, lack of inflationary pressure is also weighing on gold’s inflation hedge appeal.

“It’s tough to keep investors in gold, and even tougher to motivate them to buy gold,” said Dominic Schnider, an analyst at UBS Wealth Management in Singapore, according to Reuters.

However, Schnider is positive that gold prices will rebound in the second half of year. He believes that significantly improving U.S. macroeconomic environment could trigger inflation in the second half of the year, which is gold’s supportive, adding that gold could test resistance at $1,800 an ounce.

Meanwhile, investors’ falling faith in gold can be gauged by the performance of the SPDR Gold Trust (ETF) (NYSE: GLD), world’s largest gold backed exchange traded fund.

According to Reuters, holdings of SPDR Gold Trust remained unchanged at 1,221.260 tons as of Tuesday, March 26.

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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.