Gold Prices Gain; Silver Prices Down

Amid volatile trading, gold prices edged marginally higher during Asian trading hours on Thursday as nervy investors remained in sidelines after the metal plunged to its almost three year low level in the previous session due to stronger U.S. dollar,   technical sell-off and growing concerns that the Federal Reserve’s multi-billion dollar bond purchase program would be tapered sooner than later. Silver prices edged lower in early trading on Thursday.

At last check, U.S. gold futures for August delivery edged up 0.10% to $1,231.00 an ounce while spot gold gained 0.27% to $1,228.50 an ounce.

Gold futures tumbled more than 3% on Wednesday as technical sell-off was triggered after the metal fell below its key support level of $1,270 an ounce.

The metal has now plunged 12% in last eight sessions as investors are cutting positions on inflation-hedge bets after the Federal Reserve Chairman, Ben Bernanke signaled that the bond purchase program might be slowed down by the year end, should economic indicators continued to show an improvement.

The weakness in physical side demand from the world’s top two consumers, India and China is also putting pressure on prices.

Concerned over ballooning current account deficit, the Indian government, in order to curb imports, raised import tariffs on gold from May.

The demand from China is also slowing due to lack of liquidity in the system.

Meanwhile, ABN Amro became the latest bank to cut price outlook on gold for 2013. The bank lowered 2013 price outlook to $1,100 an ounce from $1,300 while 2014 price forecast was slashed to $900 from $1,000. Already, Deutsche Bank, Goldman Sachs, Morgan Stanley, Credit Suisse and HSBC have slashed their price outlook on gold.

In a note to investors, ABN Amro’s analyst Georgette Boele said, “There is no reason for investors to hold precious metals as the outlook for capital gains are dim and they pay no income.”

Silver futures were last down 0.28% to $18.53 an ounce.

In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was up 1.17%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was up 1.76%.

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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.