Gold Prices Up on Bargain Hunting, Silver Prices Edge Down
Gold prices recovered a tad during Asian trading hours on Friday as bargain hunters from China pounced on the opportunity after the metal plunged to more than 2-½ year low level in the preceding session. However, the precious metal is on course to log its worst weekly performance in almost two years, showed a data provided by Reuters. Silver prices, meanwhile, edged lower in early trading on Friday.
Bullion prices are now down about 23% from the beginning of this year. For the week, the metal has slumped more than 7%.
At last check, U.S. gold futures for August delivery gained 0.61% to $1,294 an ounce while spot gold climbed 1.2% to $1,293.09 an ounce.
Silver futures edged down 0.32% to $19.76 an ounce.
The metal came under tremendous selling pressure on Thursday after the Federal Reserve signaled at possible winding up of economic stimulating measures by the year-end. Panic selling was triggered after the metal fell below 1,321 an ounce level— its lowest level when gold prices crashed in mid-April.
Following the financial crisis of 2008/09, the Fed’s ultra loose monetary policy fuelled the demand for inflation-hedge bets with gold touching its all-time-high price of $1,920 an ounce in September 2011.
However, lack of any inflationary pressure and the Fed’s indication that the era of easy-money is coming to an end has rattled bullion investors, prompting them to cut positions on inflation-hedge bets.
Speaking to Reuters, Joyce Liu, an investment analyst at Phillip Futures in Singapore said, “What the market is undergoing now is a state of normalization, going back to pre-stimulus times.”
“Since the first stimulus program, markets have jumped despite fundamentals not justifying such a spike,” added Liu.
Holdings of the SPDR Gold Trust (ETF) (NYSE: GLD), the world’s largest gold-backed exchange traded fund, fell another 0.4% to 995.35 tons on Thursday, showed a data provided by 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.
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