Gold Prices Rally as Dollar Sinks; Silver Prices Also Edge Higher

Gold prices gained sharply on Tuesday as broadly lower U.S. dollar boosted the demand for dollar dominated commodities while weakness in global equities and downbeat remarks from the European Central Bank (ECB) President over the euro zone’s economic outlook, lifted metal’s safe haven appeal. Silver prices also edged higher in trading on Tuesday.

U.S. gold futures for August contract climbed $17.30, or 1.2%, to settle at $1,415.80 an ounce at the COMEX division of the New York Mercantile Exchange while spot gold was last up 0.84% to $1,414.55 an ounce.

Silver futures were last 0.84% to $22.66 an ounce.

The U.S. dollar slumped against all major traded currencies on Thursday. The euro rose sharply against the greenback after the ECB left its interest rate policy unchanged. The Bank of England also kept its policy intact. As most commodities including gold are dollar-priced, weakness in the U.S. dollar tends to push of the demand as traders dealing in other currencies find them cheaper to buy.

Meanwhile, weakness in global equity markets also prompted investors to seek safety in safe-haven bets. Uncertainty over whether the Federal Reserve will continue with its bond purchase program is keeping investors’ risk appetite restrained.

Moreover, ECB President Mario Draghi’s remarks that the downside risks to the euro zone’s economic outlook still persists, also eroded investors’ confidence on Thursday. Draghi also warned that weaker-than-expected demand both from the euro zone and global markets along slow pace of structural reforms implemented by some euro nations could act a headwind against the recovery.

Now, the entire spotlight will shift to the non-farm payrolls report. The report will be released on Friday. The job numbers will provide a fairly good idea over for how long the Fed would keep providing economic stimulating measures.

Holdings of the SPDR Gold Trust (ETF) (NYSE: GLD) remained unchanged on Wednesday after falling 0.3% on Tuesday, showed a data provided by Reuters.

 

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.