Gold Prices Edge Higher but Struggle to Stay Above $1400; Silver Prices Slip
Gold prices extended gains on Friday and hovered around $1400 an ounce level as the metal’s physical side demand from Asia continued to remain extremely strong; nevertheless, it was the fourth straight weekly loss. Silver prices, meanwhile, edged lower on Friday.
Gold futures for June gold delivery added $3.10, or 0.2%, to settle at $1,395.60 while spot gold gained 0.6 percent to $1,399 per ounce. For the week, gold futures tumbled 7.1% and spot gold lost about 5%.
The demand for physical gold in Asia has been phenomenal since last three sessions. On Monday, cash gold fell to a two-year low level, which triggered a strong buying interest from Asia. Dealers said that they ran out of bars, gold coins and nugget’s stock even as premiums in these jumped to multi-months high.
In a note to investors, MKS Capital said, “In retail physical markets there have been exponential increases in premiums globally,” according to Reuters.
“High premiums mean supply is drying up, and it will show up next in the paper gold markets, which could squeeze some week spec shorts out in the near term.”
However, analysts fear that the yellow metal prices will remain vulnerable as overall sentiment remains bearish. While holdings of SPDR Gold Trust (ETF) (NYSE: GLD) witnessed persistent outflows for the most part of the current year, investors are also worried that gold-supportive QE3 could end much sooner than expected. The Federal Reserve’s latest minutes showed that some policymakers were not happy with monthly $85 billion bond purchase program. Earlier this week, holdings of SPDR Gold Trust dropped to a three-year low level. On Thursday, holdings fell another 0.2 percent to 1,133 tons, a data provided by Reuters showed.
Besides, concerns over more central banks will follow Cypriot government’s decision to sell gold reserves to pay external debt has also put pressure on gold.
Silver futures fell 0.73% to $23.075 an ounce.
In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.36%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 0.74%.
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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.
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