Stock Market Watch

Gold Prices Settle Lower

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Gold prices edged lower in trading today as investors booked profit after Friday’s huge rally that saw the precious metal rise more than 4%.

Gold posted its biggest one-day gain on Friday as disappointing U.S. jobs report raised prospects of another round of quantitative easing from the Federal Reserve. Another round of quantitative easing would weaken dollar, which would be a positive for gold.


The Labor Department on Friday reported that the U.S. economy added only 69,000 jobs in the month of May, well below economists’ forecast of a gain of 150,000 jobs.

Speaking to Reuters, Pradeep Unni, senior analyst at Richcomm Global Services in Dubai, said that Friday’s data has pushed the focus straight back to the Federal Reserve, and talk of a possible QE3 is increasing now. Unni said that it seems there are limited options with the Fed other than a fund stimulus so that President Obama can show a revival in the economy before he goes for a re-election later this year.

Unni expects gold prices to hold above $1,600 an ounce in the near-term. He said that any further fresh surprises on the economic front either from the U.S., or European Union are only likely to add to the pace of gains.

At last check, spot gold prices were trading 0.4% lower at $1,619.16 an ounce. Gold futures for delivery in August on the Comex division of the New York Mercantile Exchange settled $8.20 lower at $1,613.90 an ounce.

At last check, the SPDR Gold Trust (ETF) (NYSE: GLD) was trading 0.18% lower at $157.22, the Market Vectors ETF Trust (NYSE: GDX) was trading 0.34% higher at $46.82, and iShares Gold Trust (ETF) (NYSE: IAU) was trading 0.22% lower at $15.77.

Riskier assets have come under selling pressure in the last few days amid rising worries about the euro zone debt crisis and concerns over a global economic slowdown. In recent months, gold has traded in line with riskier assets. However, the precious metal’s link with riskier assets is weakening.

In a research note, HSBC today said that up until very recently, lower U.S. bond yields were also accompanied by lower gold prices primarily because as the euro zone sovereign crisis intensified capital moved into U.S. Treasuries and other perceived safe government bonds and as the dollar rallied in reaction to capital inflows, gold prices, which have an inverse relationship with the greenback, fell. HSBC, however, noted that gold prices appear to have recently broken away from this relationship and have turned higher despite further declines in U.S. Treasury yields.

In other precious metals, silver prices also edged lower in trading today. At last check, spot silver was trading 1.33% lower at $28.26 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) is currently trading 0.54% lower at $27.47, the ProShares Ultra Silver (ETF) (NYSE: AGQ) is currently trading 1.11% lower at $40.97, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) is currently trading 1.38% higher at $66.

Platinum prices also fell sharply in trading today. At last check, spot platinum was trading 1.02% lower at $1,426.74 an ounce. Platinum prices had risen more than 2% on Friday. The gold/platinum ratio, today, hit the highest for more than four months at 1.13. The ratio measures the number of platinum ounces needed to buy an ounce of gold. Meanwhile, gold is trading at a premium of above $190 an ounce over platinum.

Palladium prices edged higher in trading today, extending their gains from Friday. At last check, spot palladium was trading 0.31% higher at $610.25 an ounce. Spot palladium had gained 0.3% 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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