Stock Market Watch

Gold Prices Rise Sharply; Silver Prices Also Edge Higher

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Gold prices climbed sharply on Wednesday as broadly weaker U.S. dollar boosted the demand for dollar-dominated commodities while improving global macroeconomic environment also burnished metal’s inflation hedge appeal. Silver prices also edged higher on Wednesday.

Moreover, strong physical side demand from China and rest of Asian markets is also supporting prices; but incessant liquidations from gold-backed ETF’s including the world’s largest, the SPDR Gold Trust (ETF) (NYSE: GLD) could cap gains.

U.S. gold futures for June delivery gained $24.90, or 1.7%, to settle at $1,473.70 an ounce at the COMEX division of the New York Mercantile Exchange.

Spot gold was last up 1.42% to $1,472.64 an ounce.

The U.S. dollar traded broadly lower on Wednesday. While two back-to-back unexpectedly strong German industrial orders data has nearly ruled out the possibility of further monetary easing from the European Central Bank (ECB), boosting the euro, the Aussie dollar also gained sharply after Chinese trade data showed that both exports and imports rose at much faster-than-expected pace in April.

As most commodities, including gold are priced in U.S. dollars, any weakness in the U.S. unit pushes up the demand since traders dealing in other currencies find them cheaper to buy.

German industrial orders climbed 1.2% in March (month-on month) against analysts’ expectation of 0.2% drop. On Tuesday, a data showed industrial orders rose 2.2% in February while analysts were expecting a decline of 0.5%.

Spate of strong economic data not only increased investors’ risk appetite with S&P 500 and Dow Jones extending their fresh highs, crude oil futures also jumped more than 1%, bolstering yellow metal’s inflation hedge appeal.

Nevertheless, holdings of the SPDR Gold Trust continued to fall until Tuesday. The fund’s holdings fell by another 0.42% to 1,057.79 tons on Tuesday, according to Reuters.

Silver futures were last up 0.35% to $23.89 an ounce.

In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.09%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 0.42%.

 

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edliston
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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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.

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