Gold Prices inched lower on Friday, paring its initial gains as metal’s failure to breach $1,755 an ounce range, triggered technical weakness, prompting investors to close positions. Silver prices, meanwhile, fell sharply in early trading on Friday.
At bbout 6:30 a.m. EST, U.S. gold futures for December delivery edged down 0.56% to $1,735 an ounce.
Earlier during Asian trading hours, gold prices gained after EU officials managed to build a consensus over proposed idea of making the European Central Bank (ECB) as the supervisory body to oversee the functioning of euro zone banks. According to Reuters, a French source said that ailing euro zone banks will be eligible to receive funds (recapitalization) from the EU rescue funds from next year. The development bolstered the euro as it recovered some of its lost ground against the U.S dollar, lifting the demand for gold.
Nevertheless, gold prices failed to make any major headway as failure to hit $1755 level, resulted in technical sell-off. “There's some disappointment after (gold) could not pass through $1,754 to $1,755 level,” said Ronald Leung, director of Lee Cheong Gold Dealers in Hong Kong, while speaking to Reuters.
Gold prices, which hit record high of $1,795.69 earlier in October, have been weighed by stronger dollar as vulnerability in the euro owing to debt crisis and lack of sufficient directions for bullion investors in the wake of economic uncertainty, prompted bullion investors to cut short their bullish positions.
A data provided by Reuters showed that open interest, a measure on total outstanding net long and short positions on gold futures fell by 3 percent in the current week.
Meanwhile, physical demand for gold continued to remain subdued on Friday. However, with festival season just around the corner in India, demand can pick up. In a note to investors ANZ Bank wrote, “Gold could see a seasonal up-tick in demand from India going into the festival season, but it is likely to be more subdued than previous years unless the Indian rupee appreciates.”
Silver futures plunged 1.5% to $32.38 an ounce.
In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 1.10%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was down 1.86%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was up 1.85%.
