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Gold Prices Rise Sharply

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Gold prices rose sharply in trading on Friday and were headed for their best weekly performance since late October. Gold prices have been gaining momentum after the Federal Reserve said on late Wednesday that it is likely to keep interest rates low until late 2014.

Silver and platinum prices also rose sharply on Friday and were on course for their best weekly performance in nine months and nearly four years, respectively in January.


At last check, spot gold was trading 0.8% higher at $1,734.50 an ounce. Spot gold prices have risen nearly 10% this month, following sharp losses in December. For the week, spot gold prices rose more than 4%, the biggest weekly gain since the week ended October 30.

The precious metal rose to a seven-week high on Thursday after the Fed said that it plans to keep interest rates on hold until at least late 2014. The Fed also signaled that it would be ready to take further measures to boost the U.S. economy.

Anne-Laure Tremblay, analyst at BNP Paribas, told Reuters that the Federal Reserve’s announcement that it would keep rates exceptionally low until 2014 was clearly not fully priced by the market. Tremblay said that real interest rates are likely to stay negative in the U.S. in the next two years, which will be supportive of the gold price.

Pradeep Unni, Senior Analyst at Richcomm Global Services, told Reuters that after the Fed chairman’s vow to keep the rates low until late 2014, strong buying interest was visible. Unni said that anxious investors have joined the fray of speculators who are now increasingly concerned by currency depreciation, as global central banks use easy monetary policies to flood markets with cash.

Meanwhile, UBS said in a research note today that the market attitude towards gold for most of January could be summed up in two words, cautious optimism. UBS said that investors were reluctant to add to positions aggressively as memories of the disappointment in fourth-quarter lingered. UBS said that a fresh catalyst was needed and the FOMC outcome on Wednesday fit the bill as more accommodative monetary policy is a very good foundation for gold to build on the next move higher.

Gold futures for delivery in February on the Comex division of the New York Mercantile Exchange rose $4.90 to $1,731.60 an ounce on Friday.

Gold ETFs also rose sharply on Friday. The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 1.02% higher at $168.97, the Market Vectors ETF Trust (NYSE: GDX) ended the day 2.47% higher at $57.14, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 1.07% higher at $16.95.

Silver prices also extended their gains on Friday. At last check, spot silver was trading $0.43 higher at $33.85 an ounce. Silver is headed for nearly a 20% increase in January, which is its biggest monthly gain since April 2011.

Silver ETFs also rose sharply in Friday’s trading session. The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 1.63% higher at $32.96, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 3.37% higher at $61.61.

The ProShares UltraShort Silver (ETF) (NYSE: ZSL), which takes a short position on silver, ended the day 3.15% lower at $10.13.

Platinum also rose on Friday. At last check, spot platinum was trading 0.9% higher at $1,617.24 an ounce. Platinum has risen nearly 15% this month, which is its biggest monthly gain since February 2008. Meanwhile, the unusual premium seen between gold and platinum has also narrowed to around $120 an ounce from a record $230 an ounce on January 6.

Spot palladium fell 0.6% to $683.47 an ounce on Friday.

 

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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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