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Gold Prices on Course to End Lower; Silver Prices Also Slip

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Gold prices edged lower on Tuesday as the metal’s inflation-hedge appeal is waning quickly amid rising fears that the era of easy money will end soon. Silver prices also slipped in trading on Tuesday.

At last check, gold futures for August delivery were down 0.66% to $1,376.80 an ounce while spot gold lost 0.61% to $1,377.90 an ounce.

While investors are worried that the Federal Reserve could soon start tapering its multi-billion dollar bond purchase program in the backdrop of improving U.S. macroeconomic environment, the Bank of Japan, earlier today, refrained from offering any more economic stimulating measures.

Earlier on Monday, the European Central Bank (ECB) President Mario Draghi said that the bank will not resort to stoking up the inflation rate in order to curb the euro zone crisis.

Global central banks’  extremely accommodating monetary policies have been the key driving force behind gold bull runs in last few years. Year 2012 marked the 12th consecutive year when the metal logged yearly gains. Rampant currency printing raise inflation concerns which in turn pushes the demand for inflation-hedge assets such as gold.

“The view is now that the Fed will taper quantitative easing,” said David Govett, head of precious metal at Marex Spectron, according to Reuters,

“If that happens, it’s negative for gold. A lot of the rally gold has had in the last three years has been down to QE,” added Govett.

Meanwhile, gold’s safe haven appeal was also weighed down after the credit rating agency, Standard & Poor (S&P) upgraded U.S’s sovereign credit rating outlook to “stable” from “negative” on Monday.

Silver futures were last down 1.32% to $21.64 an ounce.

In late trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.76%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.44%.

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edliston
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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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.

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