Gold Prices Slip Below $1,600; Silver Prices Fall Sharply

Gold Prices slipped below $1,600 an ounce level on Thursday as demand for safe-haven bets receded after the banks in Cyprus reopened amid relative calmness, driving out fears of widespread bank runs. Silver prices, meanwhile, fell sharply on Thursday.

At last check, U.S. gold futures for April delivery lost 0.72% to $1,595.70 an ounce while spot gold edged down 0.59% to $1,595.40 an ounce. Silver futures plunged 1.20% to $28.27 an ounce.

After remaining closed for about two weeks, banks in Cyprus reopened but amid very tight controls, which were aimed at averting possible massive capital outflows. And as concerns over possible escalation in euro zone debt crisis ebbed, so did the yellow metal prices. Gold tends to gain during political and economic uncertainty and vice versa.

Gold, which has reeled under pressure for the most part of this year as the U.S. macroeconomic indicators showed signs of economic rebound,  climbed to its four-week high at $1,616.36 in the previous week, after bailout talks between the Cypriot government and international lenders failed.

The disagreement fanned fears of financial system meltdown in the island nation and possible ouster from the euro zone. However, market participants were more worried about risk of contagion spreading into other vulnerable economies of the euro zone.

But now with some sorts of stability returning back in the troubled monetary union, investors are once again turning their attention towards riskier assets.

Investors’ fading faith in gold is also reflected by stagnated holdings in gold backed ETFs.

A data provided by Reuters showed that holdings of SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed exchange traded funds, remained unchanged at 1,221.260 tons for the fourth straight session on Wednesday, March 27.

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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.