Gold Prices Inch Higher, Silver Prices Climb More Than 1 %
Gold futures inched higher during Asian trading hours on Monday as weaker dollar helped metal recover some of its lost ground after 1 percent slump in the previous session even as strong physical side demand from China supported the yellow metal; nevertheless, prices are likely to remain capped due to ambiguity surrounding central banks’ monetary policies, believe experts. Silver prices, meanwhile, rose sharply in early trading on Monday.
At last check, gold futures for February delivery edged up 0.45% to $1,668.10 an ounce while spot gold gained 0.36% to $1,668.50 an ounce.
On Friday, gold futures tumbled 1 percent or $17.40 an ounce to settle at $1,660.60 after a data showed that consumer price index in China rose 2.5% in December after jumping 2 % November, raising suspicion that People’s Bank of China would refrain from any more economic stimulating measures.
The metal is expected to trade in a tight range of $1,660-$1,680 an ounce in the short to midterm as investors will look to central banks’ monetary policies and macroeconomic environment before taking any inflation hedge bets believe analysts, according to Reuters.
In a research note, commodities strategists at Barclays Capital wrote, “Lack of conviction has tainted gold price action, and gold has struggled to establish its identity as a safe-haven asset.”
However, strategist are still bullish on the yellow metal in the long-term as they added “ The hurdles for gold are mounting, from dollar strength to a softer physical market, but in our view, a number of positive macro catalysts still exist that could push prices significantly higher.”
Central banks’ extremely accommodative monetary policies have been the key driving force behind gold’s bull runs in last 12 successive years.
On Monday, though, the metal found some support from weaker U.S. dollar. The ICE dollar Index, a gauge on U.S. unit’s performance against a basket of six major traded currencies, eased to 79.409 from 79.566 in late North American trade on Friday. A softer greenback makes dollar-dominated commodities cheaper for those traders who deal in other currencies.
Meanwhile, physical side demand of gold continues to remain buoyant in China, ahead of the Chinese New Year. “We see a fair amount of buying from China after gold prices fell last Friday”, said Peter Tse, director at ScotiaMocatta, to Reuters. However, Tse too sounded cautious as he said, “Having said that, gold is still range-bound and I wouldn’t put too much on this morning’s rise until liquidity returns when the European market returns.”
Silver futures climbed 1.11% to $30.75 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was up 0.98%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was up 1.98%.
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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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