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Gold Prices Edge Higher; Silver Prices Lower

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Gold prices gained nearly half a percentage point on Monday as last week’s disappointing labor department data over employment heralded uncertainty for the U.S. economy.  Besides, weak data also revived hope of further quantitative easing by the Fed. Bullion also got boost from China as country’s inflation spiked. Silver prices, meanwhile, are marginally lower in trading today.

While Spot gold climbed as much as 1 percent in early hours to $1,648 an ounce, before easing at $1,639.80 by 0329 GMT;  U.S. gold edged up 0.7 percent to $1,641.20.


Earlier in the last week, gold plunged more than 2 percent after U.S. policymakers offered no hints on   further quantitative easing.

However, the metal’s appeal as a hedge against the inflation got burnished as U.S. employers hired less than expected workers in March compared to previous few months. Last week, the U.S. labor department announced that only 120,000 jobs were added both by private and public sectors even as analysts were expecting at least 203,000 jobs creations. Weak employment data could keep the door open for the Federal Reserve for further monetary easing.

Meanwhile, a higher-than-expected reading on China’s annual inflation in March also pushed the gold prices. Besides, market sentiment towards gold turned more positive as analysts in China dismissed the possibility that the data would deter Beijing from its pro-growth monetary policy.

According to Li Ning, an analyst at Shanghai CIFCO Futures, “If we see more RRR (reserve requirement ratios) cuts, it will be positive for gold as it will raise inflation outlook down the road”.

A very rate of inflation in China during 2011 resulted in strong demand for gold.  According to World Gold Council, the demand for physical metal in China also increased by 20% last year even as the demand in rest of the world increased by 7% in the same period.

In India—world’s biggest market for physical gold—jewelers finally ended their nearly three week strike as their demand for a roll back on excise  duties on unbranded jewelry  received an assurance  by the government- which stated that it would look to scrap its hike proposal altogether.

Silver futures are currently trading 0.32% lower at $31.63 an ounce. In pre-market trading in New York, the iShares Silver Trust (ETF) (NYSE: SLV) is currently up 0.65% to $30.92, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is up 1.25% to $52.73, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is down 1.28% to $10.78.

 

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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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