Gold Prices Up; Silver Prices also Gain
Gold futures overcame initial weakness to bounce back from its 10-month low level, hit during the Asian trading hours on Thursday after the European Central Bank (ECB) in its policy rate statement hinted at easing of benchmark interest rate in the near future in case the euro zone’s economy fail to show signs of rebound. Silver prices also edged higher on Thursday.
At last check, U.S. gold futures for June delivery 0.14% to $1,555.70 an ounce. Silver futures inched up 0.29% to $26.88 an ounce.
Although ECB’s President Mario Draghi, as expected, stopped short of altering existing monetary policy, recent wave of unexpectedly weak economic data releases from the currency bloc made him to argue in favor of more monetary easing.
Earlier the Bank of Japan also announced series of extremely aggressive economic stimulating measures.
Gold prices tend to benefit in an environment of accommodating monetary policies since excessive lending or cash printing stoke inflationary pressure which in turn prompts investors to seek safety in inflation-hedge assets such as gold.
Still, bullion investors will wait for the Labor Department’s monthly non-farm payrolls data to gauge the state of health of the U.S. job market.
The Federal Reserve’s ongoing quantitative easing or QE3 is pegged to the improvement in the job market.
Should non-farm payrolls report show signs of weakness in the labor market then the Fed will be reluctant to squeeze or halt its QE3.
In a note to clients, Saxo Bank Vice President Ole Hansen said, “Gold is desperately trying to bounce, but it’s failing quite miserably. It’s trying to react positively to negative news and dovish comments, but sentiment is so shaken that it will take more than this,” adding that investors’ sentiment on gold was so shaken that they will prefer to hold back and wait for non-farm payroll report on Friday.
SPDR Gold Trust’s Holdings Continue to Shrink
A data provided by Reuters showed that holdings of SPDR Gold Trust (ETF) (NYSE: GLD) declined by another 2.71 tons on Wednesday.
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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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