Stock Market Watch

Gold Prices Plunge as Rising Dollar and Threat of Fed’s QE Tapering Weigh on Sentiment; Silver Prices Also Slip

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Gold prices tumbled about 1% on Wednesday as investors remained in sidelines after stronger-than-expected U.S. job and GDP data boosted the dollar and fuelled speculation that the Federal Reserve might soon start to squeeze its asset purchase program amid significantly improving macroeconomic environment. Silver prices also slipped in trading on Wednesday.

At last check, gold futures lost 1.00% to $1,311.60 an ounce while spot gold was down 1.17% to $1,311.21 an ounce. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was down 1.11% to $126.70.

Silver futures fell 0.48% to $19.58 an ounce.

Earlier today, the Automatic Data Processing Inc’s (ADP) private sector job report showed that the U.S. economy added 200,000 jobs in July, exceeding economists’ forecast for 180,000.

The U.S. GDP expanded at an unexpectedly faster pace in the second quarter, according to the Commerce Department. The GDP grew at an annualized rate of 1.7% while economists had expected it to grow by 1%.

The pair of strong economic data releases bolstered the U.S. dollar vis-à-vis against major traded currencies, making dollar priced commodities expensive for holders of other currencies.

The greenback could climb more should the Federal Reserve decides to taper its economic stimulating measures. The Fed is expected to wrap up its two-day open market committee meeting (FOMC) by 2:00 p.m. EST after which its Chairman Ben Bernanke will provide the bank’s outlook on the U.S. economy.

Earlier in July, Bernanke signaled that the bank could possibly start winding up of the quantitative easing later this year.

Bullion, which clocked bull runs for last 12 consecutive years, has lost more than fifth of its value since the beginning of the year as investors cut bets on  the inflation-hedge asset in hordes amid rising speculation that the Federal Reserve could soon start scaling down its economic stimulating measure.








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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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