Stock Market Watch

Gold Prices End Marginally Lower

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Gold witnessed its second worst weekly performance this year as the metal prices were largely unchanged on Friday. Bullion hasn’t been able to recover after Fed failed to provide any hint on further monetary easing.

Earlier in the session, the metal tumbled by almost 1% as the world’s biggest physical gold buyer, India, doubled import duties on gold.


Spot gold lost 0.1 percent, settling at $1,656.54 an ounce.

U.S. gold futures dropped $3.70, closing at $1,657.50 an ounce.  Preliminary data provided by Reuters showed  volume was largely in line with its 30-day average but lower than its previous session

Meanwhile, Oil’s rally, the dollar’s weakness and higher U.S. consumer prices in February also prompted gold investors to cover short positions from earlier this week.

It is also speculated that some funds might have exited the gold trade after the S&P 500 stock index this week hit a low of  1,400 for the first time in four years after a strong data both from the U.S. job and manufacturing sector confirmed a decent pace of economic recovery.

Bullion’s 3 % slide this week has thus eroded gains made in the January when gold investors were expecting further monetary easing. While back in January the Fed hinted on near zero interest rates, it offered no signs of further monetary stimulus this week.

Many analysts now believe that with bullion now trading well below its long-term technical support, gold could extend losses in the short term before recovering.

According to Reuters, Tom Fitzpatrick, analyst at CitiFX, Citigroup’s technical research unit, “Every retracement within this bull trend (since 2001) has managed to find a floor close to the 55-week average”.

According to Fitzpatrick, gold could test a low at $1,580 an ounce, in the next few weeks- which could set the stage for another leg higher.

Another factor which weighed on gold this week was rising yields on 10 years U.S treasuries. Since rising yields are good gauge on short term interest rates, dollar was quick to gain against major currencies. As most commodities’ are traded in dollars, any gain in the greenback inversely impacts commodities’ demand, including gold.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.14% higher at $161.30, the Market Vectors ETF Trust (NYSE: GDX) ended the day 0.42% lower at $49.93, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.12% higher at $16.19.

Silver, on the other hand, was only precious metal which gained; however, it still lost 4.5% in the week. According to metal analysts, the weekly drop may have set the stage for even steeper losses with a possible drop to $27.50 an ounce.

Commenting over silver’s retreat, technical analysts at Barclays Capital said to Reuters “silver had been in the process of unwinding its oversold condition. But with silver’s break below $33.25, it has now reverted the trend and is targeting $30 per ounce”.

On Friday, Silver edged up 0.2 percent, closing at $32.56 an ounce.

Presenting its annual financial budget for 2012-13, the Indian Government hiked the import duty on gold to 4%, on friday. Many analysts believe that the move will squeeze local demand for jewelry.

Commenting over the hike, Afshin Nabavi, head of trading at MKS Finance said to Reuters “We will have to wait and see how (the import duty) works but from the outlines we are seeing, it will be slightly bearish for gold in the immediate future”.

Meanwhile in some other precious metals market, Platinum shed 0.6 percent, settling at $1,670.24 an ounce, even as  palladium lost 0.5 percent on the day, closing at $697.22.

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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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