Gold prices traded around $1600 an ounce on Thursday as investors wait for European Central Bank (ECB) to announce the policy statement even as the Federal Reserve dashed hopes of providing any additional monetary stimulus to the U.S. economy. Silver prices, meanwhile, slipped on Thursday.
Earlier on Tuesday gold prices ended in the red territory, a third successive drop as hopes of monetary easing from fed faded before the official policy statement release. Later, in line with economists’ prediction, the Federal Reserve stopped short of providing any sort of additional monetary measures even though it acknowledged the fact that U.S economy has lost the momentum.
On Thursday, all eyes will be on the ECB. The ECB hinted at possible resumption of asset buying program; besides, it did not rule out the possibility of printing more money to boost assets’ prices.
Nevertheless, concerns are whether the ECB will be able take bold actions. Should the ECB adopt some more aggressive measures, then gold’s prices are likely to rise, as metal’s inflation-hedge appeal will increase.
Furthermore, monetary easing could also instill investors’ confidence in the euro, pushing both the euro and the demand for the yellow metal. In general, gold prices and euro move in tandem.
U.S. gold futures inched up 0.03% over its previous close at $1,604.02 an ounce.
Meanwhile, in the physical market side, South Korea’s central bank increased its gold reserves in July. According to Reuters, South Korea purchased 16 tons of gold in July, increasing its total gold reserves by 30% to 70.4 tones, in an attempt to diversify it foreign reserves kitty.
Lately central banks around the world, especially Russia have been proactively buying gold, to shield themselves from currency exchange volatility amid global economic slowdown.
Still, gold market hardly showed any reaction as metal’s prices usually hinges on the monetary policies of the fed and ECB.
Silver futures extended losses on Thursday, down 0.29%, at $27.455 an ounce.
In pre-market trading in New York, the iShares Silver Trust (ETF) (NYSE: SLV) was up 1.36%, the ProShares Ultra Silver (ETF) (NYSE: AGQ) was up 0.08%, and the ProShares UltraShort Silver (ETF) (NYSE: ZSL) was down 0.48%.
