Gold, Silver Prices Gain

Gold prices recovered some of its lost ground during Asian trading hours on Monday but remained below $1,300 an ounce as lack of progress made during the weekend budget talks, has rekindled concerns over debt-default, prompting investors to hold cash for the time being. Silver prices have also edged higher in early trading on Monday.

At last check, gold futures for December delivery climbed 1.12% to $1,282.30 an ounce while spot gold added 0.73% to $1,281.91 an ounce. Gold futures posted a weekly loss of about 3.4% on Friday.

The SPDR Gold Trust (ETF) (NYSE: GLD) was up 1.04% in premarket trading to $123.88.

Silver futures gained 1.30% to $21.54 an ounce.

Although gold’s safe-haven appeal tends to burnish in the times of uncertainty, investors are reluctant to take bets even as the government shutdown enters third week.

Lawmakers continued with their negotiations over the weekend; and, although some progress was made on Sunday, there is still no guarantee whether the U.S. will avoid the debt-default.

Speaking to Reuters, a Hong Kong based precious metal dealer said, “People are worried about the U.S. situation and their first reaction is to hold cash and only then they look at safe haven assets like gold,”

“That is why if the U.S. doesn’t find a solution, gold will be sold initially,” warned the dealer.

Gold’s fading investment appeal is reflected by falling holdings in the world’s top gold-backed exchange traded fund, the SPDR Gold Trust.

A data provided by Reuters showed that the holdings of the fund fell another 5.40 tons on Friday to 890.98 tons. The fund’s total holdings are at four year-low level.

In addition, several big sell orders seen at the COMEX December futures during the last week also rattled bullion investors.

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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.