Stock Market Watch

Gold Prices Rise for a Straight Day

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Amid heavy trading, gold prices gained almost 1% on Friday even as U.S equities and crude oil prices rose following positive news from the U.S. job report.

Gold which was flat for most part of the week following a sharp drop last week, slid a bit on Friday initially as the greenback strengthened further along with market participants’ hope fading over Fed stimulating the U.S. economy any further by quantitative easing.


However, the metal later staged an impressive comeback as it gained $40, closing at $1,700 an ounce. Bullion’s price volatility has been increasing after the metal plunged 5-percent last Wednesday when Fed Chairman Ben Bernanke stopped short of signaling more easing was on the way.

Speaking to Reuters, Jeffrey Sica, chief investment officer of SICA Wealth Management with more than $1 billion in assets, said that investors haven’t completely ruled out quantitative easing by the Fed as the economic growth has been fragile in the U.S and the debt crisis in the euro-zone has not been completely resolved. “Even though the (job) number looks good, there’s not an overwhelming sense that there’s going to be great times ahead,” believes Sica. The money manger also said that “As long as the ‘quantitative easing devaluating the dollar scenario’ is present, it will support the price of gold”.

However, some analysts say that Friday’s better than expected jobs report has dashed hopes of another round of quantitative easing. Ole Hansen, Senior Manager at Saxo Bank, told Reuters that this is another nail in the quantitative easing coffin and as such non-supportive for gold. .  Hansen also believes that widespread volatility in the bullion market has shaken investors’ faith in the metal. “Confidence has been shaken this week, and it looks like more long liquidation lies ahead”, concluded Hansen.

On the other hand, some analysts believe that bullion has shown resilience in the recent past. For instance, James Steel, chief commodity analyst at HSBC said “Gold is showing a lot of resiliency and it may rebound as emerging-market demand is gradually reviving”. Commenting over strong demand for physical gold in emerging markets like India and China, Steel said “Despite the severity of the early steep losses, we have already seen fairly decent buying coming in, and the firm oil prices were helping.”

On Friday, Spot gold climbed up 0.7 percent on the day to $1,710.81 an ounce, having dropped earlier  to a session low of $1,677.34, which was also a six-week low.

Friday’s climb in bullion’s price has wiped out losses from earlier week, to some extent.

Gold initially slid 1 percent following U.S. employers added more than 200,000 workers to their payrolls for a third successive month in February, a sign the economy was recovering.

Nevertheless, despite of gold’s strong comeback, some analysts are more bearish on gold’s outlook after several sharp pull backs and said the metal could test $1,650 an ounce, an area of support from its earlier correction.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.68% higher at $166.40, the Market Vectors ETF Trust (NYSE: GDX) ended the day 0.13% lower at $53.24, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.66% higher at $16.68.

So far this year, the gold price has edged up 9 percent, following on 11 years of successive increases, after the Fed said in January it would keep rates near zero until at least late 2014.

Meanwhile, in some other precious metals markets, platinum gained 1.3 percent, settling  at $1,679.24 an ounce, and palladium edged up 0.2 percent, closing at $700.72 an ounce.

 

 

 

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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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