Gold Prices Steady; Silver Prices Gain
Gold prices held steady during Asian trading hours on Monday after clocking biggest weekly gain since last eight weeks on Friday as expectations are widespread that the Federal Reserve will keep continuing with its gold-supportive economic stimulating measures for the time being. Silver prices, meanwhile, edged higher in early trading on Monday.
At last check, gold December futures edged up 0.17% to $1,316.90 an ounce while spot gold added 0.13% to $1,317.49 an ounce.
The SPDR Gold Trust (ETF) (NYSE: GLD) rose 0.27% in premarket trading to $127.19.
Silver futures gained 0.99% to $22.13 an ounce.
Economists say that the recent government shutdown had heavily weighed on the U.S. economy. It is estimated that 0.6% of the fourth quarter GDP growth has been knocked-off due to the shutdown. Furthermore, the bipartisan deal offers only a short-term solution. Hence, the U.S. economy is not yet out of the woods. The agreement allows the treasury to raise its borrowing limit only until Feb 7 while federal agencies will be receiving funding until Jan 15. This means that the threat of debt default still exists should lawmakers fail to find a permanent solution during the upcoming budget-deal battle, early next year.
In these circumstances, it is unlikely that the Fed would taper its multi-billion dollar bond purchase program (Quantitative easing), which in turn keep interest rates low and encourage investors to put money on non-interest bearing assets such as gold.
“Given the U.S. government shutdown and the economic risk that the U.S. economy is facing, expectations for tapering in October seem less strong than before,” said OCBC analyst, Barnabas Gan, according to Reuters.
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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. |