Gold Prices Slip on Technical Selling




Gold prices slipped in trading today on technical selling. Prices fell even as equities rose. In recent weeks, gold has tracked riskier assets such as equities; however, the precious metal fell today even as equities and other riskier assets rose.

Gold prices fell after failing to breakthrough a key chart resistance. The precious metal has failed to breakthrough this level since last week.


Gold fell even as the S&P 500 rose more than 1% and the U.S. dollar fell as investors hoped that the euro zone debt crisis will be contained.

Global equity markets rose after the French President Nicolas Sarkozy and the German Chancellor Angela Merkel met in Paris to outline plans on imposing fiscal discipline across the euro zone. The two leaders called for a new treaty that would impose fiscal discipline among the euro zone countries.

Nic Brown, analyst at Natixis, told CNBC today politicians across the board recognize there is a huge issue here that needs sorting out. Brown said that whether Europe can deliver is still an open question and there is likely to be a fair amount of volatility on the political front this week.

The call for a tighter fiscal union among euro zone nations from leaders of euro zone’s two biggest economies comes a few days before the crucial European Union summit, which has been described by many as a make or break meeting for the euro. France and Germany are expected to push the idea of fiscal union at the summit.

Investors’ sentiment was also lifted as yields on Italian bonds fell after the country’s new prime minister; Mario Monti announced euros 30 billion worth of budget cuts over the weekend. The announcement from Monti over the weekend has given investors’ confidence that Italy will be able to contain the debt crisis under the new technocratic government.

However, the early optimism faded after Standard & Poor’s said that it is placing the entire euro zone, including Germany, on watch for downgrade. The inclusion of Germany in the list came as a surprise for investors as the country is the strongest in the euro zone. Stocks in U.S. shed some of their early gains following the announcement from S&P.

The rating agency said in a statement that systemic stress in the euro zone has risen in recent weeks and reached such a level that a review of all euro zone sovereign ratings is warranted.

David Meger, Director of Metals Trading at Vision Financial Markets, told CNBC that gold has moved in tandem with equities, however, it is way too early to say that gold will lose its safe-haven status at some point.

Spot gold prices, which rose almost 4%, last week, dropped 0.9% to $1,729.95 an ounce. Gold futures for delivery in December dropped $16.80 to settle at $1,734.50 an ounce on the Comex division of the New York Mercantile Exchange.

Gold ETFs ended lower today, with the SPDR Gold Trust (ETF) (NYSE: GLD) closing 1.53% lower at $167.32, the Market Vectors ETF Trust (NYSE: GDX) closing 0.36% lower at $57.36, and the iShares Gold Trust (ETF) (NYSE: IAU) closing 1.47% lower at $16.78.

Silver prices also slipped in trading today. Spot silver ended fell 0.9% to $32.28 an ounce.

The iShares Silver Trust (ETF) (NYSE: SLV) ended the day 1.86% lower at $31.05, the ProShares Ultra Silver (ETF) (NYSE: AGQ) ended the day 3.98% lower at $56.91, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) ended the day 3.73% higher at $12.78.

In other precious metals, palladium rose0.8% to $647.47 an ounce, while platinum fell 0.7% to $1,536.22 an ounce.

 

 

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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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