Stock Market Watch

Gold Prices Hover Near $1,320, Silver Prices Edge Down

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Gold futures remained almost flat during Asian trading hours on Tuesday as investors wait for a policy rate statement from the Federal Reserve. Silver prices have edged lower in early trading on Tuesday.

At last check, gold futures for December delivery inched down 0.06% to $1,317.00 an ounce while spot gold gained 0.44% to $1,319.15 an ounce.

SPDR Gold Trust (ETF) (NYSE: GLD) gained 0.74% in premarket trading to $127.39 an ounce.

Silver futures edged down 0.25% to $21.95 an ounce.

The Fed’s two day open market committee meeting (FOMC) will commence from Tuesday and investors are keen to know at what pace the bank will start to scale down its economic stimulating measures.

Bullion, which clocked 12 successive bull runs until 2012 in the backdrop of extremely easy-money environment, has lost about 19% since the beginning of the year.

Expectations that the Fed will start to wind down its bond purchase program (quantitative easing) prompted investors to shun non-interest yielding assets such as gold.

Gold prices tend to slip when central banks adopt tighter monetary policy. This is because; interest rates rise in this environment and gold being a non-interest bearing asset, does not provide any incentive to investors.

Still, many market participants believe that the tapering process will not be instant. It widely speculated that the Fed in the beginning might narrow its $85 billion worth bond purchase program by $10 billion to $15 billion.

“From the current economic situation in the United States, we expect only a mild tapering, not any big action,” said Helen Lau, an analyst at UOB-Kay Hian in Hong Kong while speaking to Reuters.








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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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