Stock Market Watch

Gold Posts Highest Weekly Gains in Last Eight Weeks

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Gold prices gained marginally in trading on Friday following Euro Zone leaders’ pledged to shore up the region’s economy and the euro but gains were limited as U.S. economic data, although disappointing, were not weak enough to press the Federal Reserve for another round of quantitative easing.

The yellow metal prices nudged higher 0.5% on Friday and posted its highest weekly gain, in previous eight weeks.


Earlier during the session gold climbed up 1% as France’s President Francois Hollande and Germany’s Chancellor Angel Merkel pledged to do all they could to ensure that euro zone’s single currency remain preserved. The comment came just after European Central Bank’s (ECB) hint on granting a banking license to European Stability Mechanism (ESM), which would offer it (ESM) direct access to additional funds from the ECB.

Nevertheless, gold pared its earlier gains when U.S. economic indicators showed stronger-than-expected numbers, underpinning the fact that U.S. economy might not be in that bad shape as originally thought thereby dashing hopes of further monetary easing from the Fed.  The Fed is scheduled to meet on next Tuesday and Wednesday for discussing interest rate policies.

“We started off reasonably well carrying over from yesterday. But we have pared gains since then because the numbers are not as quite as disappointing, and some of the premium in the gold market has already built in,” said James Steel, metals analyst at HSBC to Reuters.

U.S. GDP showed that growth rate contracted to 1.5% in the second quarter down from 2% in the first quarter.  The consumer sentiment in July also dipped to its lowest level this year but the reading was higher than economists’ estimations.

Spot gold inched higher 0.5 percent to close at $1,623.09 an ounce, having earlier touched a high of $1,629.10, which was also a five-week high.

U.S. gold futures also edged up 0.5 percent at $1,622.60 an ounce.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.54% higher at $157.61.

In last four days of the week, gold leaped 3 percent buoyed by expectations over monetary easing from the ECB even as euro recovered some of the lost ground.

Speaking to Reuters over possible gold’s prices course in the short to middle-term, Mark Arbeter, chief technical strategist of S&P Capital IQ, said that should gold breaks its key resistance level of $1,640 then it could well trade in the range of $1,800 an ounce.

On Thursday the metal broke its 100 day moving average since May 1.

Futures trading were active for the entire week. Friday’s trading volume at 300,000 lots,  was about two times higher than 30-day average, and was on course to be the highest turnover since June 1, according to a preliminary data from Reuters.

Lately gold has traded in a very tight range of $1,525 and $1,640 an ounce due to absence of hint on further monetary easing from the fed even as deteriorating euro zone crisis kept the lid on the metal’s prices.

Physical Market Lackluster

Physical gold buying in Asia, more particularly in India remained muted as buyers remained on sidelines after gold prices climbed to its four week high.

In some other precious metals markets, silver gained 0.9 percent at $27.74 an ounce from Thursday’s close, having earlier hit a three-week high of $27.85.

Spot platinum edged up 0.4 percent to settle at $1,406.00 an ounce.  Spot platinum’s discount to spot gold rose to about $215 an ounce in the earlier session, its biggest difference vis-à-vis gold since early December. Spot palladium leaped 2.1 percent at $577.00 per ounce.

 

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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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