Gold and Silver Prices Sharply Lower

Gold prices continued to trade in red territory on Thursday weighed by euro zone concerns even as lackluster U.S. economic data failed to arrest the slide. Silver prices have also edged lower in trading today.

The metal is now on course to drop almost 6% for May alongside posting losses for 4 straight months since January 2000.

At last check, Spot gold slid 0.6 percent at $1,553 an ounce and U.S. gold futures for August delivery slipped $6.50 an ounce at $1,559.20.

Amid heightening debt crisis in the euro zone, surging borrowing costs in Spain and Italy together with deteriorating banking sector and possibility of Greece’s departure from the currency bloc- the euro has bore the maximum brunt.

The euro is on course for biggest monthly plunge in at least eight months, with some analysts expecting it to drop towards $1.20 in coming weeks as the euro zone’s debt crisis worsens.

Gold, although considered as safe haven asset, moved in tandem with riskier assets this year.

Commenting over gold prices flip-flops, UBS, in its note wrote, “Investors don’t have the same strategic approach to gold as before, Instead of taking a multi-week or multi-month view, much of the exposure to gold has been on an intra-day bias of late. The market is too highly correlated with risk for many participants’ liking.”

Gold demand from India- world’s largest consumer of gold- remains muted as the tumbling rupee pushed up the cost for local buyers.

However, central banks around the world have been keen to buy gold in a bid to diversify portfolio of reserves.

According to IMF and Reuters, Russia, Mexico, and the Philippines have all recently added to their gold reserves, while the Turkish Central Bank said on Thursday it may gradually raise the upper limit of lira required reserves that can be held in gold to 30 percent from 20 percent.

Among other precious metals, silver edged down 1.25 percent at $27.54 an ounce. Spot platinum lost 0.1 percent at $1,394.74 an ounce, and spot palladium fell 0.6 percent at $599.22 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) is currently trading 0.44% lower at $27, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is currently trading 1% lower at $39.62, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is currently trading 0.88% higher at $68.69.

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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.