Gold Futures Settle Higher; Silver Futures Also Gain
Gold futures tacked higher on Tuesday but the rally faded as investors remained on the sidelines ahead of the key policy rate statements from the Federal Reserve and the European Central Banks, later this week. Silver futures also gained on Tuesday.
The physical side demand for gold also eased in Asia as one of the top gold buyers, China, is shut until Thursday due to May Day holidays.
Gold futures for June delivery edged up $4.70, or 0.3%, to settle at $1,472.10 an ounce. For the month, gold futures tumbled about 8%. Spot gold was last down 0.23% to $1,472.35 an ounce. On Wednesday, the trading volume is likely to remain thin as most markets in Asia such as Thailand, Hong Kong and practically most of the Europe will remain closed on account of the Labor Day.
However, in the U.S. all eyes will be focused on the Federal Reserve. The Fed, which began its Open Market Committee Meeting (FOMC) on Tuesday, is expected to announce its policy rate statement on Wednesday.
Market participants will be keen to know the Fed’s views on latest round of quantitative easing or QE3. Earlier today, a CNBC poll showed that majority of Wall Street’s economists and money managers expect that the Fed will continue with its monetary easing measures until the end of 2014, which will be gold supportive, in the long run.
The ECB is also due to announce its policy rate statement on Thursday. Expectations are abound that the ECB might slash its benchmark interest rate by 25 basis points to record low level of 0.50%, prompted by spate of dismal economic data releases. On Tuesday, a data release from the euro zone showed that the annual inflation fell 1.2% in April, which is the lowest level since Feb 2010.
Investors will also eye the Labor Department’s monthly non-farm payrolls data, scheduled to be released on Friday before they decide to take any new positions.
“It is a wait-and-see week, with Chinese holidays, FOMC meetings and non-farm payrolls,” said David Govett, head of precious metals at broker Marex Spectro, according to Reuters.
Silver futures inched up 0.02% to $24.17 an ounce at last check.
In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.64%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.15%.
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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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