Gold Prices Slip But on Course to Post Biggest weekly gains in last 4 Months; Silver Prices also Slip
Gold prices inched lower during Asian trading hours on Friday but are heading for biggest weekly gains in last four months as fears of financial system meltdown in Cyprus and slowdown in the euro zone recovery has sparked off the demand for safe-haven assets. Silver prices also edged lower in early trading on Friday.
At last check, U.S. gold futures for April delivery fell 0.13% to $1,611.70 an ounce while spot gold edged down 0.14% to $1,611.86.
Earlier on Thursday, the European Central Bank (ECB) set 4-day deadline for Cyprus to reach a deal with euro zone finance ministers. The ECB warned that should the island nation fails to enter in an agreement with Brussels within stipulated time then it will cut out financial aid to Greece.
There were hopes that Russia could step in and provide Cyprus much needed financial support. However, its talks with Moscow failed, according to news reports. Concerns are mounting that Cyprus which is on the brink of financial system meltdown, could exit from the euro zone.
While island’s economy is too small to impact at global scale, investors are worried over contagion spreading to other vulnerable economies of euro zone.
“Gold is likely to stay firm in the short term thanks to Cyprus. Though Cyprus is a small economy, there are concerns about the risk of contagion if the crisis there doesn’t get solved properly,” said Li Ning, an analyst at Shanghai CIFCO Futures, according to Reuters.
Last week, euro zone finance ministers agreed to bailout Cyprus by announcing a financial aid package worth euro 10 billion (about $12.9 billion) but demanded very radical measures. it asked the island nation to tax depositors by flat rate of 9.9%, fanning fears of bank runs.
Macroeconomic weakness in the euro zone is also supporting gold prices. On Thursday composite PMI data both from Germany and France showed contraction in business activities during March.
Silver futures shed 0.57% to $29.045 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.50%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 0.38%.
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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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