Stock Market Watch

Gold Prices Settle Lower

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Gold prices ended lower on Monday as stronger dollar and bonds attracted investors looking for safer bets even as data on U.S. retail sales for March resulted in upbeat sentiment.

Gold for June delivery slid $10.50, or 0.6%, to $1,649.70 an ounce on the Comex division of the New York Mercantile Exchange. Yesterday’s close was the lowest in last one week.


The strength in dollar is mainly attributed to the weakening of euro. According to Jim Steel, analysts at HSBC, New York, “Resurfacing concerns about the euro zone’s debt problems weakened the euro”.

Steel also said that similar situation was witnessed last year when deteriorating debt crises in the euro-zone were so great that the metal suffered badly, unable to catch any safe-haven flows.

On Monday, the U.S. dollar continued to trade higher on most of the day – a trend continued from the last week- as concerns over Spanish bond yields which went above psychological 6% level, prompted selling pressure on the euro-zone’s common currency. Last week, Spain’s central bank reported that Spain’s commercial banks were too reliant on ECB funding, pointing liquidity crunch in country’s banking sector which set the yields shoot-up.

A strengthening dollar is not a good news for the bullion investors as the metal like many other commodities is traded in dollars, therefore any upsurge in the greenback is likely to discourage traders holding currencies other than dollars.  However, the dollar lost some of its steam as the dollar index recently stood at 79.562 against late Friday’s reading of 79.828.

In its notes to investors, analysts at Commerzbank wrote, “The metal also has been unable to resist the general downward spiral” that hit commodities and some equity markets earlier on Monday”.  Metal markets were under pressure on Monday with platinum falling to its lowest level in last two months.

Gold  has plummeted about  8 percent from near $1,800 an ounce at the end of February as some strong strings  of positive U.S. economic data in February and March  reduced market hopes about a third round of asset buy back by the Federal Reserve also known as quantitative easing to boost growth.

Commenting over the metal and greenback inverse relation, Carlos Parez-Santalla, precious metals trader at PVM Futures told to Reuters, “As long as the general impression of economic stability is positive, money managers will tend to move away from the yellow metal and towards the paper investments with promise of higher returns.”

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.24% lower at $160.46.

Meanwhile, the U.S. retail sales data for March showed a 0.8% increase –rising for the third successive month—signifying the fact that the economy grew faster than expected in the first quarter.  The data could put a shadow of doubt on whether the fed would provide any further quantitative easing. Last week, gold gained 1.8% following a disappointing data from the U.S. labor department which showed non-farms jobs creation in March was lower than estimated, pointing some concerns over strength of the U.S. economic recovery.

In some other precious metal markets, Platinum for July delivery edged down $12.10, or 0.8%, to $1,575.80 an ounce. However, sister metal palladium joined copper to buck the downward trend. The contract for June delivery climbed up $3.5, or 0.5%, to end at $650.70 an ounce.

Futures on May copper added less than a cent to end the day at $3.63 per pound.

Futures on May silver lost 2 cents, or 0.1%, to close at $31.37 an ounce

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 0.03% higher at $30.56.

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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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