Gold Prices Inch Higher, Silver Prices Slip

Gold prices gained some traction during Asian trading hours on Monday after ending nearly flat in the preceding session as Wall Street economists expect the continuation of the Federal Reserve’s ongoing $85 billion monthly bond purchase program at least until the end of the year, keeping metal’s inflation hedge appeal intact. Silver prices, meanwhile, edged lower in early trading on Monday.

At last check, the U.S. gold futures for April gained 0.11% to $1,578.70 an ounce delivery while spot gold added 0.1% to $1,579.30 an ounce. Silver futures inched down 0.06% to $28.93 an ounce.

Earlier on Friday, the precious metal slumped to its two-week low after the Labor Department’s nonfarm payrolls data for February showed that the U.S. economy added 236,000 new jobs against economists’ estimate of 160,000. Investors’ feared that continuous barrage of better-than-expected economic indicators might prompt the Fed to curl its economic stimulating measures, which is bearish for gold.

Nonetheless, the metal showed a strong resistance at it $1,560 an ounce level with many analysts suggesting that the metal has “bottomed out”.

Furthermore, many Wall Street economists, according to Thomson Reuters expect the Fed to continue with its economic stimulating measures.

“Gold prices have built in the view that the U.S. recovery is on a good footing and by the end of the year we should see the Fed exiting the stimulus, which should be bearish for gold,” said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong, according to Reuters.

The Federal Reserve’s extremely accommodative monetary policy has been the key factor behind gold’s bullish runs in last few years. As rampant currency printing spooks inflationary concerns, investors typically tends to increase their bets on inflation-hedge assets such as gold.

Meanwhile holdings of SPDR Gold Trust (ETF) (NYSE: GLD), world’s largest gold-backed exchange traded ETF fell 3.311 tons to 1,239.739 tons by the end of last week, the lowest since October 2011, according to a data provided by Reuters. Thus far in the current year the fund has seen outflow of 111 tons.

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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.