Stock Market Watch

Gold Prices On Course to Post Best Weekly Performance in Last One Month

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Gold prices edged higher on Friday and were heading towards clocking their best weekly performance in last one month as barrage of weaker-than-expected U.S. economic data releases in last two sessions have raised hopes that the Federal Reserve might wait a bit longer before its starts to wind down economic stimulating measures.

At last check, U.S. gold futures for December delivery gained 0.54% to $1,368.20 an ounce while spot gold edged up 0.51% to $1,367.90 an ounce.

SPDR Gold Trust (ETF) (NYSE: GLD) was last up 0.58% to $132.43

Silver futures jumped 1.46% to $23.32 an ounce.

Earlier in July, when the Federal Reserve Chairman, Ben Bernanke gave his testimony to the Congress, he indicated that the tapering of the bond purchase program could start before the year-end, provided economic indicators show significant improvement.

However, the U.S economic outlook looks uncertain. Although the labor market has shown significant recovery, some other key economic indicators have been tepid in the recent past. July’s Producer price index was flat. Manufacturing activities in the New York State and factory activities in mid-Atlantic region contracted sharply in August.  July’s housing starts data was also weaker-than-expected while the consumer sentiment also fell sharply in August, according to University of Michigan/Thomson Reuters.

Commenting over a series of disappointing economic data releases and its implication on bullion prices, Ole Hansen, General Manager at Saxo Bank said in a note to clients,  “Investors are so concentrated on the whole talk about tapering that any disappointing U.S. data can bolster prices,” according to Reuters.

“People are pricing in the fact that the Fed will keep interest rates low for quite a long time and that’s positive for gold,” added Hansen.

Gold tends to benefit in an environment of easy-money. As interest rates remain low when central banks keep an accommodative monetary policy, investors prefer non-interest bearing assets such as gold.

 








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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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