Stock Market Watch

Gold Prices Tumble, Silver Prices Also Hammered

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Gold prices tumbled more than 1.50% during Asian trading hours on Friday as investors cut bets on the inflation-hedge asset in hordes after a spate of unexpectedly strong U.S. economic data releases earlier this week, fanned speculation that the Federal Reserve now might soon start tapering of the bond purchase program. Silver prices also fell sharply in early trading on Friday.

Gold futures have now hit a two-week low level and are headed for a biggest weekly decline in last four weeks.

At last check, U.S. gold futures for December delivery plunged 1.81% to $1,287.50 an ounce while spot gold tumbled 1.44% to $1.288.96 an ounce.

The Fed’s extremely accommodating monetary policy (three rounds of quantitative easing) since the financial crisis of 2008/09 has been the key factor behind bullion’s bull runs until 2012. As quantitative easing entails rampant currency printing to buy government bonds, investors took safety in gold due to fear of currency debasement.

However, the U.S. macroeconomic environment has been showing some significant recovery as evident by some latest economic indicators; hence, investors are wary to take positions in gold, which is traditionally considered as an inflation-hedge asset.

“We are still expecting the Fed to taper its QE in September… The labour data, along with GDP, is pretty positive and allows for the Fed to taper this year,” said Barnabas Gan, an analyst at OCBC Bank, according to Reuters.

Now, on Friday, the entire spotlight will shift to the Labor Department’s monthly non-farm payrolls data. If the job numbers show strong recovery in the labor market then gold prices could slip even further.

Silver futures fell 1.88% to $19.25 an ounce.

In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 1.11%, and the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 2.47%.

 








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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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