Gold Prices Moves To $1600 an Ounce Over Euro Zone Concerns; Silver Prices Gain
Gold prices overcame initial weakness to climb above $1600 an ounce on Wednesday as demand for safe haven assets resurfaced as investors are worried that Cypriot bailout agreement could act as template for futures rescues in the euro zone where investors (depositors) will have to bear the brunt by paying hefty taxes on unsecured deposits. Silver prices also edged higher.
At last check, U.S. gold futures for April delivery rose 0.66% to $1,606.20 an ounce while spot gold rose 0.48% to $1,606.26 an ounce.
Unexpectedly weak economic indicators from the euro zone also weighed on European equities even as investors scrambled to raise their exposure in safe haven assets. The euro zone economic confidence fell for the first time in last four months in March while France confirmed that its economy contracted in the last quarter of 2012.
Besides, growing political uncertainty in Italy also supported gold prices. Earlier today, Italy’s head of center left alliance, Pier Luigi Bersani ruled out possibility of forming coalition government.
The euro slumped to its four month-low against the U.S. dollar while the dollar index jumped to its 7 ½ month high as investors sought safety in “almighty dollar”.
“Gold moved above $1,600 as there is a lot of uncertainty in Europe due to the Cyprus situation… people don’t know how things will unfold and that uncertainty helps gold, while euro zone data was also bad,” Bernard Sin, senior vice president at MKS Capital, according to Reuters.
Silver futures inched up 0.04% to $28.69 an ounce.
In late trading on Wednesday, the iShares Silver Trust (ETF) (NYSE: SLV) was up 0.14% to $27.79, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was up 0.18% to $38.77, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was down 0.37% to $53.62.
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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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