Gold Prices Sink Further in Red Territory, Silver Prices Down as Well
Gold prices extended losses during Asian trading hours to hit almost four-week low level on Wednesday as demand for safe haven assets remained lackluster in the backdrop of significantly improving macroeconomic environment in the U.S. Silver prices also edged lower in early trading on Wednesday.
At last check, U.S. gold futures for June delivery fell 0.44% to $1,569.0 an ounce while spot gold edged down 0.35% to $1,569.70 an ounce.
Bullion, which gained 1% in March as edgy investors scrambled towards safe haven assets amid fears of financial system meltdown in Cyprus and subsequent danger of contagion spreading to other vulnerable economies of the currency bloc, has now slumped around 3% after hitting as high as $1606 in March.
While simmering concerns over reigniting of debt crisis in the euro zone has eased, the U.S economy is also showing signs of rebound. Earlier on Tuesday, a data release from the Commerce Department showed that factory orders climbed more-than-expected. This data was preceded by better-than-expected construction spending data, released on Monday.
In this backdrop, investors are rushing back towards better performing equity markets and shunning gold, which neither provides dividends or yields.
Speaking to Reuters, Song Seng Wun, regional economist at CIMB said, “Actually, all depends on the flavor of the day. Now, I suppose sentiment has shifted. Perhaps, with the U.S. economy on a stronger footing, it’s better to be in equities.”
Echoing Wun views, Yuichi Ikemizu, branch manager for Standard Bank in Tokyo , said “There is a lack of interest in gold right now and everybody seems to be sitting on the sidelines. Stocks are still looking more attractive for investors than gold and that’s where money continues to flow into,” according to Reuters.
Meanwhile, all eyes will remained focused on March’s non-farm payrolls data, scheduled to be released on Friday. The Federal Reserve’s quantitative easing has been the main driving force behind gold bull runs in last four years. In case, job numbers turn out to be extremely strong, as it did in February then investors will fear that the Fed could cut short or trim its QE3, which will further weigh on gold prices.
Silver futures extended losses, shedding 0.63% to $27.07 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was up 0.04%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 0.89%.
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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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