Gold Prices Settle Higher; Silver Prices Surge
Gold prices climbed 1% on Monday as weakness in the U.S. dollar boosted the demand for dollar dominated commodities while rising expectations that global central banks might further ease their monetary policies to shore up the economy also helped improving metal’s inflation-hedge appeal. Silver prices also rose sharply on Monday.
Gold futures for June delivery gained $13.80, or 1%, to settle at $1,467.40 an ounce while spot gold was last up 0.4% to $1,468.39 an ounce.
The U.S. dollar came under pressure on Monday and traded broadly lower after the Commerce Department’s preliminary first quarter GDP data, released on Friday showed that the economy expanded at slower-than-expected pace, fanning hopes that the Federal Reserve might continue with its existing $85 billion worth monthly bond purchase program until the year-end.
The ICE dollar Index, a gauge on U.S. unit’s performance against a basket of six major traded currencies, fell to 82.141 on Monday from 82.484 in late North American trading on Friday.
As most commodities, including gold are dollar-priced, any weakness in the U.S. dollar boosts the demand for these commodities as they become cheaper to buy for traders dealing in other currencies.
Demand for physical gold however eased on Monday as China, which is one of the world’s biggest buyers of gold, is shut until Thursday on account of May day holidays. This in turn could put pressure on the physical side demand in coming days.
Gold ETFs Outflows Continue
A data provided by Reuters showed that holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed ETF, witnessed an outflow of 7.2 tons on Friday.
A separate data also provided Reuters, showed that total outflows of all top gold-backed ETFs stood at 354.6 tons thus far in the current year. Last year, the net inflows were 220.2 tons.
Silver futures climbed 1.82% to $24.19 an ounce, at last check.
In late trading, iShares Silver Trust (ETF) (NYSE: SLV) was trading 1.52% higher, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was trading 3.13% higher.
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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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