FY: Gold Prices Inch Lower as Investors Play Safe with no Clear Directions from Central Banks
Gold Prices fell a tad on Friday as clueless investors amid absence of any action from European Central Bank (ECB) remained on the sidelines, pinning hopes on China’s central bank to ease monetary policy, boosting the demand for metal. Silver prices also fell in early trading on Friday.
Despite the decline today, gold is on course to post second successive weekly gains.
Having touched $1,920 an ounce during last September, the precious metal has struggled so far this year as central banks have been rather reluctant in offering aggressive monetary easing measures. The ECB, after hinting at resumption of sovereign bond buying program last week, remained silent on when its quantitative easing could commence.
At last check, U.S. gold futures slid 0.41% from the previous close to, $1610.50.
In the U.S., bullion investors are eagerly waiting for the Federal Reserve’s next meeting in Jackson Hole, Wyoming on August 31, hoping to receive some hint on further quantitative easing. Concerns are widespread that after recent bouts of unexpectedly stronger economic indicators, the central bank could shove off from its monetary easing plans. Until then, investors seem to be content adopting wait and watch policy—which can hurt the trading volume badly unless the ECB steps in with its bond purchase program.
Four last four sessions, trading volume on U.S. gold futures have been 40 to 60 percent below than 30 days moving average. The metal has also traded in a very tight range of $15 an ounce for the entire week.
With gold failing to make any headway, investors are pinning hopes on China’s central bank to further slash its benchmark interest rate to boost spending in China. On Thursday a data both on consumer price inflation and factory activities showed that world’s second largest economy was slowing down amid global economic slowdown.
A data provided by Reuters showed that holdings in world’s largest silver-backed exchange traded fund, New York's iShares Silver Trust (ETF) (NYSE: SLV) and gold-backed exchange traded funds New York's SPDR Gold Trust (ETF) (NYSE: GLD), remained unchanged between Wednesday and Thursday.
Silver futures also edged down, 0.86%, to $27.855 an ounce.
