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Gold Prices Fall Along With Euro As Spain Auctions its Bonds; Silver Prices Flat

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Gold prices edged lower as the euro slid just ahead of the Spanish bond auction. Investors fear that a debt crisis in the euro-zone is resurfacing with Spain in the spotlight this time as country’s yields went above 6% last week. However, with global economic uncertainty rising, the appeal of gold as a safe haven instrument could push up the metal’s price. Meanwhile, silver prices are flat.

The market sentiment in the euro-zone was subdued right from the start as Spain prepares to auction its governments bonds later in the day. It is feared that Spain will see its borrowing cost leap on its short term bonds as the country grapples with high fiscal deficit, above 20% unemployment rate and struggling banking sector.

Now, there’s widespread uncertainty concerning the global economic prospects. Last week China disappointed with its GDP data for the first quarter even as U.S. non-farm jobs data raised the question mark on the economic recovery.  Accordingly, analysts feel that gold’s safe heaven appeal may attract more investors as dark clouds continue to loom over the euro-zone and global economy.


According to Ed Meir, an analyst at INTL FCStone, “We expect that if European credit conditions continue to deteriorate, gold (along with the dollar) could start to better reflect the growing tensions by moving higher on its steam”.

While Spot edged slid 0.1 percent to $1,649.70 an ounce by 0312 GMT, extending the price decline to a third straight session. U.S. gold remained flat at $1,650.80.

Technical analysts like Reuters Wan Tao feels that spot gold could fall to $1,630 an ounce during the day. But on the other hand, Lynette Tan, an analyst at Phillip Futures in Singapore believes that

“People may buy into the dollar as a safe haven, which causes some kind of neutral trade in gold”. Lynette also said that they are looking at gold to trade between $1,600 and $1,660.

Meanwhile, silver prices started flat with Spot silver remaining almost unchanged at $31.43, after hitting a one-week low of $31.16 hit in the previous session.

In pre-market trading in New York, the iShares Silver Trust (ETF) (NYSE: SLV) is currently up 0.62% to $30.75, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is currently up 1.26% to $52.05, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is down 0.82% to $10.97.

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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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