Gold and silver prices advanced, and the dollar held firm
Monday on news of a cut in the U.K.'s credit rating and central
bank buying of gold.
Spot gold prices rose $9, or 0.57%, to $1,590.50 an ounce.SPDR
Gold Shares (
), tracking one-tenth of an ounce of bullion, added 0.6% to
153.93 on the
stock market today
Russia and Kazakhstan central banks expanded their gold
reserves for a fourth straight month in January, Bloomberg News
reported, citing IMF data.
On Friday, Moody's downgraded U.K. government debt one notch
to Aa1 from AAA, citing a weak growth outlook and a high, rising
Gold should find price support at $1,550 an ounce as lower
prices attract Chinese buyers, Standard Bank said last week.
"This pickup in demand is evident in the gold premium for kilo
bars that jumped to $23.25 Thursday -- up from $11.09 at the
start of February," Walter de Wet, an analyst at Standard Bank,
wrote in a report.
Gold and stocks have been moving in opposite directions and so
gold could fall further if the stocks continue their uptrend,
Harry Dent of economic research firm HS Dent in Tampa, Fla., told
clients in a note Friday.
"We are looking to give a second buy signal for gold and
silver sometime (this) week if they either hold above $1,570 or
make a new low," Dent wrote. "There is very strong support around
Gold has sold off perhaps because the global economy and
financial outlook is improving after three years of turmoil, says
Ed Yardeni, president of Yardeni Research. Central banks may
start to let up on their easy-money policies that drive investors
"Last year, gold peaked at $1,792 on Oct. 4, below the 2011
peak. Interestingly, that was two months after (European Central
Bank President Mario) Draghi pledged to do whatever it takes to
defend the euro," Yardeni wrote in a daily client missive.
"That's all it took to stop the financial contagion in the euro
zone. In recent weeks, the ECB's balance sheet has declined by
263 billion euros."
Central banks in China and England have both pledged to
provide easy-money policies to support their economies, but
China's balance sheet has been flat more than a year and
England's has declined over the past two months.
Gold rallied from 2009 to 2011 because of the Fed's first and
second quantitative easing programs, known as QE1 and QE2. But
gold peaked before the Fed rolled out Operation Twist and it's
failed to rally on QE4, Yardeni noted.
PowerShares DB U.S. Dollar Index Bullish (
), measuring the greenback against a basket of major foreign
currencies, ticked up a cent to 22.24.Market Vectors Gold Miners
) climbed 1.6% to 38.54.
Spot silver prices rose 54 cents, 0.9%, to $29.03 an
ounce.IShares Silver Trust (
) climbed 1% to 28.11.Global X Silver Miners ETF (
) rose 1% to 18.92.
Technical indicators suggest SLV was oversold and approaching
price support, which should spark a technical rebound,
TradingCentral.com told subscribers Friday.
But silver stockpiles appear robust, which doesn't support
higher prices, Standard Bank's de Wet says.
"The premium (in China) for kilo bars has risen only
marginally, from $0.85 at the start of February to $1.08
Thursday," de Wet wrote. "This is consistent with our belief that
silver inventory in China remains ample."