Stock Market Watch

Gold Prices Rise for a Third Straight Day

by ·


Gold prices rose for a third day in a row as the euro rose against the U.S. dollar amid optimism that the International Monetary Fund (IMF) will boost its lending resources to combat the euro zone debt crisis.

Investors’ sentiment was also lifted today after Goldman Sachs Group Inc. (NYSE: GS) reported better than expected fourth-quarter earnings.


However, gold’s gains were limited in trading today as traders remained cautious amid calls that the precious metal’s decade-long rally may be coming to an end. GFMS, a metals consultancy said in a report released on Tuesday that gold is nearing the end of a decade-long run as the macroeconomic backdrop changes.

Gold’s gains were also limited as traders monitored developments in Greece, where officials met with private investors to decide on the haircut they need to take on their debt holdings. Anne-Laure Tremblay, analyst at BNP Paribas, told Reuters that while in the short term, gold may have further upside, failure of Greece and its private creditors to reach an agreement in the coming days could derail the upward trend.

Frank McGhee, head of Precious Metals Trader at Integrated Brokerage Services LLC, told Reuters that if the European situation does not get resolved, which has been priced into the market, we could be right back to asset-allocation type selling in a fairly short order. McGhee also said that gold could also sell off if China does not implement any kind of stimulus as move that has been broadly anticipated by the markets.

Nic Brown, analyst at Natixis, told Reuters that if you can move towards a long-term solution in Europe than that is negative for gold.  Brown also said that you have to look at how much money Europeans have invested in gold and if you had some kind of resolution that gave more confidence in the currency to what extent those net inflows would turn into net outflows.

Spot gold rose 0.4% to $1,658.15 an ounce in trading today. Gold futures on the Comex division of the New York Mercantile Exchange rose $4.30 to settle at $1,659.90 an ounce.

According to Jonathan Jossen, a Comex gold options trader, the order flow was very bullish today with good-size trades of call options at higher strike prices.

Gold prices have risen sharply so far this year. The precious metal has also broken ranks with the euro in recent weeks. In a research note, HSBC today said that corrective EUR-USD could continue as there are large short positions in the euro and further gains may result in a sharp short covering euro rally. HSBC noted that this would likely support gold, however, beyond a near-term rally, slow progress on the euro zone debt crisis may keep the market negative on the euro and limit euro gains.

Gold ETFs also rose in trading today. At last check, the SPDR Gold Trust (ETF) (NYSE: GLD) was trading 0.54% higher at $161.36, the Market Vectors ETF Trust (NYSE: GDX) was trading 0.04% higher at $53.19, and the iShares Gold Trust (ETF) (NYSE: IAU) was trading 0.62% higher at $16.19.

Silver prices also rose sharply in trading today. At last check, spot silver was trading 1.3% higher at $30.46 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) is currently trading 1.40% higher at $29.61, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is currently trading 2.86% higher at $50.05, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is currently trading 2.79% lower at $12.90.

In other precious metals, spot platinum rose 0.16% to $1,522.75 an ounce, while spot palladium rose 2.7% to $666.25 an ounce.

 

 

 

More Posts by this author

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.


Tags:

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.

You may also like...