Stock Market Watch

Gold Prices Hammered Again, Silver Prices also Slip

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Gold futures pared early gains and dipped to a two-week low level as the U.S. dollar rose sharply against major currencies following the release of some strong U.S. economic data.  The European Central Bank’s decision to keep its accommodative monetary policy intact also supported the U.S. unit, making dollar-priced commodities expensive for dealers holding other currencies. Silver prices also slipped in trading on Thursday.

At last check, gold futures for December delivery plunged 1.27% to $1,372.40 an ounce while spot gold tumbled 1.36% to $1,371.86 an ounce. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was down 1.52% to $132.57.

Silver futures fell 0.60% to $23.27 an ounce.

A spate of solid economic data releases have further raised the possibility that the Federal Reserve could begin the tapering of its asset purchases by September.

While weekly first time jobless claims fell more-than-expected, the Institute of Supply Management’s non-manufacturing PMI Index climbed to its highest level since December 2005 in August.

Separately, the Automatic Data Processing’s (ADP) private sector job report showed 176,000 new payroll additions, which almost matched economists’ forecast.

Now, the entire focus will shift to Friday’s non-farm payrolls report. The data is expected to provide a strong clue over when and at what pace the Fed might start scaling down its economic stimulating measures.

Gold Prices will come under more pressure should the Fed starts adopting more hawkish stance. This is because; a tighter monetary policy will spike interest rates which in turn make gold less appealing since it is a non-interest bearing asset. Besides, a stronger dollar (due to favorable interest rate differentials) will also weigh on gold’s prices.








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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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