Stock Market Watch

Gold Prices Slip

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Gold prices fell in Friday’s trading as investors booked profit after an initially rally as the news about Greece receiving second round of bailouts emerged.

Earlier gold gained sharply over the news that said China’s Central Bank might have used some of its huge foreign exchange reserves in buying gold, late last year.


Nonetheless, the bullion was quick to pare its early gains along with the euro and U.S. equities as investors treaded with caution just ahead of Monday’s crucial meeting where euro-zone’s ministers will finalize the new financial package for debt laden Greece. The prevailing uncertainty prompted many investors to close out positions before the U.S presidents’ holiday on Monday.

Commenting on the widespread fluctuation on bullion market in the recent past, James Steel, Chief Commodity analysts at the HSBC told Reuters”Gold cannot seem to break away from the influence of the wider financial markets”.

While sharing his views with Reuters, Mr. Steel also added “The eventual settlement of the euro zone sovereign debt crisis should eventually break this link. Until then, gold trading is likely to be volatile and prone to chase euro zone and especially Greek headlines.”

On Friday, Spot Gold fell 0.3%, closing at $1,723.20 an ounce. However, Gold gained 0.2% for the last week, a rebound after losing for three successive weeks. Growing optimism over resolution both on Greek and euro-zone debt crisis pulled up the metal’s demand.

Gold futures closed at $$1,735.90 an ounce, losing $2.50 over earlier close.  The Trading volume was 40 percent below its 30-day average on Friday.

The recent movements on the bullion market prove one thing: gold is strongly correlated to the currency fluctuations; for instance, the ongoing sovereign debt and credit crisis in the euro-zone, prompted investors to bet heavily on the dollar, pushing down the demand for the gold and euro. Gold traditional safe-haven appeal took a beating as it was shown recently that the gyration in the single currency exerts a greater impact on bullion.

So far this year, Spot gold gained around 10 percent, thanks mainly to the Federal Reserve’s interest rate policy which hints that rates are not likely to move beyond zero for some three more years, prompting talk of more gold-bullish quantitative easing.

Accordingly, Investment buying is strong, as data showed holdings of gold in exchange-traded products have soared by over 100,000 ounces this week to 70 million ounces.

Meanwhile, commenting on bullion’s movement on short and medium term, Mark D. Arbeter, chief technical strategist at S&P Capital IQ, told Reuters that gold and silver were at risk to further losses after they had posted lower highs, particularly if the U.S. dollar rallied.

S&P Capital’s Arbeter also added that gold could test major chart support between $1,640 and $1,650 an ounce, and must climb above recent highs at $1,766 for its uptrend to resume.

The SPDR Gold Trust (ETF) (NYSE: GLD) ended the day 0.38% lower at $167.37, the Market Vectors ETF Trust (NYSE: GDX) ended the day 1.49% lower at $54.15, and the iShares Gold Trust (ETF) (NYSE: IAU) ended the day 0.30% lower at $16.80.

For the week ended Friday, the SPDR Gold Trust (ETF) rose 0.14%, the Market Vectors ETF Trust fell 0.62%, and the iShares Gold Trust ETF rose 0.18%.

Meanwhile in some other precious metal categories: Platinum performed strongly in Friday’s trading session. The metal was up of up 0.6 percent at $1,629.99 an ounce, at last check. Platinum futures were boosted by supply worries.

Palladium lost 0.9 percent, ending at $685.47 an ounce; even as silver fell 0.8 percent, closing at $33.20 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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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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