Gold Prices Move Up Marginally; Silver Prices Lower

Gold prices are fluctuating between gains and losses today as sagging global economy prompted investors to seek safety in U.S. dollars. Meanwhile, silver prices have edged lower in trading today.

The dollar index—a gauge on U.S. unit’s performance relative to a basket of six major currencies—showed that greenback stayed close to its one month high earlier this week, while euro slumped to almost two year low against the U.S. dollar.

The euro already weighed by member countries’ rising borrowing cost and economic slowdown, faced yet another jolt on Tuesday when a data published in China showed that country’s imports in June nearly halved compared to the last year. For the euro zone, especially, Germany, China serves as one of the biggest export market.

Dollar and gold prices are inversely related. In other words, rising dollar will lessen the demand for dollar priced gold in international markets. In technical terms, the inverse correlation between gold and dollar stood at -0.55 on Tuesday- which was the strongest inverse correlation in almost two years. A correlation reading of -1 indicates perfect inverse correlation.

At last check, gold futures for August delivery edged up 0.27%, at $1,593.40 before falling to $1,586.10 an ounce, earlier in the session.

Commenting over lack of demand in the bullion market, Li Ning, an analyst at Shanghai CIFCO Futures, said to Reuters, “The market is being a little pessimistic and cautious about the global economy, and investors are choosing the dollar as the top safety haven. The strength in the dollar is in turn putting pressure on gold prices.”

According to Wang Tao, a technical analyst at Reuters, spot gold could drop below $1576 an ounce on Tuesday.

Meanwhile Merrill Lynch, in its research note to its investors wrote that ongoing euro zone crisis will weigh on gold prices as euro is likely to remain under pressure. However, the bank also maintained that gold prices could get a boost should the fed decides to provide another round of quantitative easing.

At last check, silver futures were down 0.11%, at 27.415.

Source: http://fyxnews.com/smw/30428/Gold-Prices-Move-Up-Marginally-Silver-Prices-Lower#ixzz20E0aPQze