Gold and Silver Prices Rise Sharply

Gold prices gained during Asian trading hours on Monday as the demand from Asia continued to remain strong notwithstanding about $150 an ounce jump in prices since April 16, when the metal hit two-year level of 1,321 an ounce. Weakness in the U.S. dollar following tepid first quarter GDP data (released last week) also boosted the demand for dollar dominated commodities. Silver prices also rose sharply in early trading on Monday.

At last check, gold futures were June delivery climbed 1.16% to $1,470.50 an ounce while spot gold edged up 0.58% to $1,471.00 an ounce. Silver futures leaped 1.88% to $24.21 an ounce.

Besides, speculation that central banks could provide additional monetary easing measures or continue with its existing accommodating polices to shore up the economic growth has also burnished metal’s inflation-hedge appeal.

Series of not so inspiring U.S. economic indicators in the recent past have raised expectations that the Federal Reserve will now be less inclined to halt or squeeze its ongoing $85 billion worth monthly bond purchase program before the year-end. Just last week, a preliminary U.S. GDP report showed that the economy rose by 2.5% in the first quarter against economists’ expectation of 3%.

In Europe, speculation is rife that the European Central Bank might further cut its benchmark interest after policymakers hinted at possible monetary easing measures, in case economic data warrants it. Lately, spate of economic data from Europe’s growth engine, Germany have indicated sharp slowdown in business activities and drop in business sentiment.

Meanwhile, premium on gold bars remained at multi-month high level in Asia as dealers, speculators and retail investors pounced on the opportunity.

Still, overall investors’ faith on the metal remains subdued, which is reflected by falling holdings in gold-backed ETFs.

A data provided by Reuters showed that holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed ETF fell to its lowest level since September 2009.

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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.