Gold prices continued to climb up , crossing over $1,650 an ounce mark as the dollar touched to its lowest against the euro in previous three weeks even as weak U.S. employment figures helped the gold to extend further gains. Silver prices have also edged higher in trading today.
At last check, spot gold was gaining 0.58 percent at $1,653.50 an ounce, while U.S. gold futures for June delivery were adding 0.77 percent to $1,655.00 an ounce.
On Wednesday the Federal Reserve Open Market Committee kept the benchmark interest rates at near zero level- with no changes expected until 2014. However, absence of any hint on further quantitative easing dashed gold investors hope on Wednesday. The downbeat sentiment resulted in gold price touching $ 1,625 an ounce level.
However, gold prices swung sharply towards $1,640 an ounce level, overcoming momentarily loses as weakening dollar and price sensitive buying helped the bullion to regain the lost ground.
Gold generally trades inversely to the dollar as weakness in the greenback makes it cheaper for non-U.S. investors to buy the metal.
Earlier, the dollar plunged to its lowest level against the euro as Fed did not offer any hint on economy stimulating measures. Besides, a tightening of peripheral euro zone spreads also lifted the euro.
Besides exchange rates, environment of low rates is theoretically beneficial to gold as it enables the metal to compete more effectively for investors’ cash. Low rates lowers the returns from assets such as stocks and bonds, which bear dividends and yields, thereby reducing the premium that investors forfeit by owning gold.
According to Andrey Kryuchenkov, an analyst at VTB Capital, “the support s for gold would remain in the longer term in the form of central bank purchases and inflows into exchange-traded products, where investors tend to display less sensitivity to sharper declines in the gold price.”
Meanwhile, silver gained 1.56 %, trading at $ 31.17 an ounce.
The iShares Silver Trust (ETF) (NYSE: SLV) is currently trading 1.64% higher at $30.35, the ProShres Ultra Silver (ETF) (NYSE: AGQ) is currently trading 3.33% higher at $50.60, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is currently trading 3.13% lower at $11.14.
Spot platinum edged up 0.92 percent at $1,560.24 an ounce, while spot palladium gained 1.05 percent to $664.47 an ounce.
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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. |