Gold and Silver Prices Up as U.S. Dollar Falls Moderately

Gold prices edged higher during Asian trading hours on Thursday thanks to slightly weaker dollar even as investors keenly wait for the European Central Bank’s (ECB) policy statement. Silver prices also gained in early trading on Thursday.

At around 6:00 a.m. EST, gold futures for February delivery gained 0.45% to $1,663.00 an ounce and spot gold edged up 0.28% to $1,661.44 an ounce.

Even though the ECB is expected to keep  the benchmark interest rate unchanged;  some economists are of the view that the monetary union’s central bank could offer hint on further rate cuts in upcoming quarters as the region still grapple with stagnated economy. On Wednesday, an economic data release showed that Germany’s industrial production rose by mere 0.2 percent in November, falling well below economists’ anticipation of 1 percent growth.

Global central banks have kept very accommodating monetary policies lately and that has been the driving force behind gold’s bull runs.  2012 was the 12th successive gainful year for the bullion investors.

An environment of low interest rates and rampant currency printing (quantitative easing) spikes inflationary fears, which in turn boosts the demand for inflation-hedge bets such as gold.

However, the metal has been under pressure since last week when Fed’s minutes from its latest FOMC showed that several  officials were worried about unbridled asset purchases  by central bank from financial markets even as Fed’s balance sheet keeps on ballooning.

Gold prices have hovered in the tight range of $25 an ounce all though this week.

“The market got a little concerned about how aggressive the Fed will be,” said Jeremy Friesen, commodity strategist at Societe Generale in Hong Kong to Thomson Reuters.

Meanwhile, the U.S. dollar slipped against all major traded currencies on Thursday making dollar-priced commodities cheaper for traders dealing in currencies other than the U.S. unit.

The ICE Dollar Index, a gauge on U.S. dollar’s performance against a basket of six major traded currencies, slipped 0.22% to 80.37.

Silver futures climbed 0.88% to $30.16 an ounce.

In pre-market trading, iShares Silver Trust (ETF) (NYSE: SLV) was up 0.34% to $29.45.



Ed Liston is a senior contributing editor at 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.