Gold Prices Inch Up, Silver Prices Fall

Gold prices held mild gains, hovering around $1,660 an ounce level during Asian trading hours on Wednesday, as stronger physical-side demand from Asia was offset by overall cautious approach adopted bullion investors, waiting for policy rate response from the Bank of Japan and the European Central Bank. Silver prices, meanwhile, slipped in early trading on Wednesday.

At last check, gold futures for February delivery inched up 0.1 percent to trade at $1,663.80 an ounce and spot gold added 0.08% to $1,663.40 an ounce.

Earlier on Tuesday, gold reversed its three-day losing streak to post 1 percent gain after bullion investors raised their exposure in inflation-hedge bets following  the news reports that said Bank of Japan was considering more economic stimulating measure to contain the deflation.

Gold prices have been under pressure since last week when minutes released by the Federal Reserve from its latest policy rate meeting showed that officials were concerned about ongoing massive asset purchase program. There is growing perception in the market that the Fed could scale down or completely stop ongoing QE measures, which in turn fade gold’s inflation-hedge allure.

However, many analysts, according to Reuters feel that large-scale sell-off seen in the previous week, which resulted in prices hitting 4-½ month low level, was unwarranted as economic indicators aren’t still strong enough to convince the Fed to cut down its QE3.

No other factor tends to impact gold’s prices as closely as the Federal Reserve’s monetary policy.

Meanwhile in Asia, strong demand from China and India, is expected to support gold prices but in case buying momentum recedes then prices could see a downward trend, say analysts.

“Gold will probably trade in a broad range of $1,625 to $1,675 in the next few weeks,” said a Singapore-based trader while speaking to Thomson Reuters.

Silver futures slipped 0.07% to $30.46 an ounce.

In pre-market trading, the iShares Silver Trust (ETF) (NYSE: SLV) was down 0.14%.

edliston

edliston

Ed Liston is a senior contributing editor at TheStockMarketWatch.com. 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.