Stock Market Watch

Gold Prices Edge Higher; Silver Prices Slip

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Gold prices tacked higher on Wednesday, snapping six days of losing streak as broadly lower U.S. dollar supported the demand for dollar-dominated commodities. Silver prices, meanwhile, edged lower in trading on Wednesday.

Nevertheless, gains are likely to be capped as investors remain wary of taking any fresh bets on the metal given the fact that two top policymakers have already indicated that the tapering of the quantitative easing is not too far away.

Tapering of the quantitative easing will set interest rates go up, subsequently impacting the demand for gold as investors will have no incentive to hold this asset (gold does not offer any interest).

At last check, gold futures for December delivery added 0.14% to 1284.30 an ounce    while spot gold gained 0.36% to $1,285.84 an ounce. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was up 0.22% to $124.24.

Silver futures slipped 0.09% to $19.50 an ounce

The yen rose sharply against the dollar amid speculation that the Japanese currency will be in  big demand as Japanese traders, investors will soon try to repatriate or recover overseas earnings and interest and convert it on local currency ahead of the two-week holiday season which starts in mid-August.

The dollar index, which is a measure on greenback’s performance vis-à-vis a basket of rival currencies, was last down 0.40% to 81.29.

Commodities are traded in dollars in international markets; so any weakness in the U.S. unit tends to support the demand for these items as dealers trading in other currencies find them cheaper.

Meanwhile, bullion investors will now closely look out for the U.S. economic data releases. If data releases in coming weeks show significant improvement in the U.S. economy then the probability is high that the Fed could start winding down its asset purchases in coming months.

Earlier on Tuesday Chicago Fed President Charles Evans and Atlanta Fed President Dennis Lockhart said that the tapering could start as soon as September.

 








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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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