Gold Prices Gain Supported by Weaker U.S. Dollar, Silver Prices Also Rise
Gold prices edged higher on Wednesday as the metal’s safe haven appeal burnished due to rout in global equity markets, caused by political upheaval in Portugal while broadly weaker U.S. dollar also supported the demand for dollar-priced commodities. Silver prices also rose in trading on Wednesday.
At last check, gold futures for August delivery gained 0.52% to $1,249.90 an ounce while spot gold edged up 0.65% to $1,249.51 an ounce. The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.56% higher at $120.74.
Silver futures climbed 2% to $19.70 an ounce.
Concerns that euro zone debt crisis could resurface in the backdrop of political crisis in Portugal and uncertainty surrounding Greece’s next tranche of bailout fund, dented European equities even as bond yields on peripheral economies soared. In Portugal, several cabinet ministers resigned from their posts, threatening a possible collapse of the Portuguese Government.
Some mixed set of U.S. economic data releases on Wednesday also helped the metal to extend gains. While the Labor Department’s weekly jobless claims and Automatic Data Processing’s (ADP) showed that the job market was gradually improving, the Institute of Supply Management’s non-manufacturing Index fell unexpectedly in June.
The data weighed on the U.S. dollar, making the metal cheaper for traders dealing in other currencies.
However, the trading volume was thin as investors remained in sidelines ahead of the Independence Day Holiday and Friday’s all-important non-farms payrolls data.
The Job numbers could provide some clue over when the Federal Reserve might start winding down its bond purchase program.
“It would be very bad for gold if you get a non-farm payrolls number good enough for the Fed to taper but at the same time not strong enough to see any inflationary pressure coming through,” said Bank of America Merrill Lynch analyst Michael Widmer, according to Reuters.
The Fed’s ongoing quantitative easing is explicitly tied to an improvement in the U.S. labor and housing market.
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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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