Stock Market Watch

Gold Prices Slip, Silver Prices Fall More Than 1 Percent

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Gold prices continued to slide during Asian trading hours on Friday and were on course to post weekly losses as investors remain directionless in the backdrop of growing fears over U.S. fiscal woes and deteriorating economic environment in the euro zone. Meanwhile, silver prices fell more than 1% in early trading on Friday.

At around 6:30 a.m. EST, spot gold edged down 0.46% to $1,707.29 an ounce while U.S. gold futures for December delivery fell 0.26% to $1,709.40 an ounce.

According to Wang Tao, a market analyst at Reuters, technical charts suggested that spot gold could test support at $1,701 an ounce on Friday; and, if it breaks below that level then it could even drift towards $1,672.24 an ounce.

The White House and Congress are scheduled to initiate intense rounds of negotiations for resolving the fiscal budget issue from Friday. Washington has time until the end of this year to decide how it can overcome the massive deficit. Failure to reach an agreement by the end of December would automatically result in spending cuts and tax increase estimated at $600 billion from Jan 2013, which in turn could potentially plunge the U.S. economy back into recession.

Analysts say that in event of policy paralysis or lack of agreement over the issue of budget cuts, gold prices might benefit as investors would take safe haven bets; on the other hand, if the issue is resolved in stipulated time then gold prices may suffer since investors will seek higher returns from riskier assets in much stable economic environment.

Also adding to bullion woes is worsening economic environment, which has dented metal’s allure as a safe-haven asset. Economic data released on Thursday from both euro zone and the U.S. turned out to be a disappointing. While euro zone economy entered recession in the fiscal third quarter, the initial weekly jobless claims climbed to highest level in last 18 months.

Meanwhile investors’ interest in gold-backed exchange traded funds continued to soar in November. A data provided by Reuters showed that holdings of SPDR Gold Trust (ETF) (NYSE: GLD), world’s largest gold-backed ETF, reached to 1,339.616 tons as of Nov. 15, a tad lower than record high of 1,340.521 tons, hit in October 2012.

Silver futures plunged 1.36% to $32.23 an ounce.

In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.92%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.67%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was inactive.

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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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