Gold Prices Fall; Silver Prices Plunge Over 1%
Gold prices edged lower during Asian trading hours on Monday as metal’s investment allure is waning fast in the wake of improving economic indicators and better performing riskier assets. Silver prices also fell sharply in early trading on Monday.
Gold’s inflation-hedge appeal has also taken a beating as investors doubt whether the Federal Reserve will be inclined to keep its monetary policy accommodating as the U.S. economy gains momentum whilst inflation continues to remain under target.
At around 6:15 a.m. EST, gold futures for most active February delivery 0.32% to $1,665.30 while spot gold slipped o.1% to $1,664.86 an ounce. Silver futures plunged 1.01% to $31.635 an ounce.
Earlier on Friday, gold prices settled higher logging weekly gains as across-the-board rally in equity markets, and weaker dollar provided some support to the metal. Nevertheless, gains remained capped as series of solid macroeconomic data fanned fears that central bank might now be pressed to relook at its ongoing monthly $85 billion worth bond purchase program.
The non-farm payrolls climbed by 157,000 in January, according to the Labor Department—a tad short of economists’ forecast for 160,000. Besides Reuters/ University of Michigan’s revised consumer sentiment index, the ISM index on factory orders and construction spending data were all better than expected.
“Investors remain fairly optimistic in the U.S. recovery, which makes gold less attractive, even though recent data is rather a mixed bag,” said Chen Min, an analyst at Jinrui Futures in the southern Chinese city of Shenzhen, according to Thomson Reuters.
Min also warned that unless there wasn’t any unexpected good news for gold, its prices are likely to hover in the tight range of $1,660-$1,680 an ounce.
Platinum group metals, in the meantime, continue to perform strongly in the backdrop of improving global industrial outlook. On Friday, an economic data release from the U.S. showed that automobile sales climbed 14% in January from the same period of last year. Both platinum and palladium are used as auto-catalysts.
Investors’ faith on gold backed exchange traded funds fading
A data provided Thomson Reuters showed that SPDR Gold Trust (ETF) (NYSE: GLD), world’s largest gold-backed exchange traded fund, recorded an outflow of 22.728 tons in January, its biggest monthly outflow since last July.
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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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