FYX: Gold Prices Almost Flat As Investors Wait for Cues from Central Banks; Silver Prices Lower
Gold prices inched up marginally on Wednesday as investors preferred staying on sidelines hoping that central banks from both sides of the Atlantic will provide hints on further monetary easing through respective policy statements. Meanwhile, silver prices have edged lower.
While the yellow metal rallied in four of the last five trading sessions, there is growing concern on whether the central banks, more particularly, the European Central Bank (ECB) could back their words with action.
Even though Mario Draghi, ECB’s President promised to do whatever necessary within the ambit of ECB mandate to preserve both the euro and euro zone, investors are worried that lack of consensus among member countries could worsen the crisis.
For instance, Germany’s finance ministry vehemently opposed the idea of granting a banking license to the rescue fund—the European Stability Mechanism.
The ECB meeting is scheduled to start on Thursday while Bank of England is also expected to announce its policy statement on the same day.
Meanwhile, the spotlight is on the Federal Reserve’s open market committee meeting which ends on Wednesday. Should the Fed decide to provide some sort of monetary easing then gold prices are expected to climb up as metal’s inflation-hedge appeal will rise.
Gold futures for December delivery gained 0.4 percent to $1,617.40.
Gold has traded in very tight range of $1540 and $1625 in last three months as absence of any signs of monetary easing lessened the demand for gold while weakness in the euro amid euro zone debt crisis also weighed on metal’s prices.
In china, an official factory purchasing managers index plunged to its eight month low to 50.1 in July down from 50.2 in June, signifying the fact that world’s growth engine is consistently losing its economic momentum. Nevertheless, the news barely affected the bullion market as its (gold) prices usually hinges on fed’s monetary policy.
Silver futures slid 0.16% from its previous close, to $27.87 an ounce.
In pre-market trading in New York, the iShares Silver Trust (ETF) (NYSE: SLV) was down 1%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.84%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was up 1.85%.
