Stock Market Watch

Gold Prices Trim Losses Before Fed’s Minutes; Silver Prices Edge Lower

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Gold prices pared early losses but traded lower on Wednesday as investors remained in sidelines ahead of the release of the Federal Reserve’s most recent minutes. Broadly higher U.S. dollar also weighed on the metal’s demand. Silver prices also edged lower in trading on Wednesday.

At last check, gold futures for December delivery edged down 0.17% to $1,370.20 an ounce while spot gold slipped 0.07% to $1,369.20 an ounce. In late trading, the SPDR Gold Trust (ETF) (NYSE: GLD) was down 0.08% to $132.34.

Silver futures were down 0.12% to $23.09 an ounce.

The minutes from Federal Open Market Committee Meeting (FMOC), held on July 30-31, will indicate whether policymakers are ready to squeeze the economic stimulating measures or divided over this issue.

Speculation, however, is rife that Fed minutes will show that the tapering process could begin from September.

Gold, which touched its record high of $1,921 an ounce in September 2011 in the backdrop of extremely accommodating monetary policy adopted by the Fed, has lost near its fifth of its value since the start of the year due to tapering (QE3) concerns.

A tighter monetary policy (the pulling back of quantitative easing) will spike interest rates which in turn drive investors away from gold, which is a non-interest bearing asset.

“I think the market is right to be quite cautious. If QE goes into reverse, and medium- to long-term interest rates push higher, you are increasing the opportunity cost of holding things like gold,” said Nic Brown, an analyst at Natixis, according to Reuters.

The dollar index, a measure on greenback’s performance vis-à-vis a basket of major traded currencies, edged up 0.30% on Wednesday, making dollar priced commodities expensive for holders of other currencies.








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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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