Gold Extends Weekly Gain, U.S. Silver Surges Posted by Adam King on March 18, 2013
The price of gold gained in early trade on Monday after advancing for a weekly gain on Friday. On the week, the price of gold gained $15.70, or 1.0 percent, to settle just below the $1,600 per troy ounce mark.
Monday’s trade, fueled largely by concerns over the bailout deal in Cyprus, brought the price of gold up $18.10, or 1.13 percent, in the spot market to $1,610.16 per troy ounce. U.S. gold futures for April delivery gained $15.10, or 1.07 percent, to $1,609.70 per troy ounce.
Gains over the last week were also supported by a decline in the U.S. dollar, making the price of gold more affordable for holders of foreign currency, and a surge in U.S. inflation.
Mark O’Byrne, director at GoldCore, was quoted by MarketWatch saying the inflation figure was higher than expected and given that inflation pressures are building, this likely accounts for the rise in gold. He also noted the market is experiencing an element of dead-cat bounce, a market term meaning a brief recovery in the face of declining prices. O’Byrne believes gold is due to move higher from oversold levels.
On Friday, the Labor Department reported that U.S. inflation surged in February with consumer prices up 0.7 percent for the biggest increase since June 2009. Prices had been flat in the two prior months and down 0.2 percent in October.
Frank Trotter, the chief executive officer at EverBank Wealth Management in Jacksonville, Florida, said physical demand is providing support after the huge price slump. He added the government is not concerned about inflation even thought the Consumer Price Index is rising and that may be a problem long term.
Gold is historically the best and most trusted hedge against inflation as it retains an inherent value and actually benefits in nominal price from inflationary markets. Following four weeks of selling, gold has now advanced for two weeks straight and extended gains into the new trading week.
A Kitco News Gold Survey found that out of 33 participants and 25 respondents, 17 see prices moving up this week with only two seeing prices down and six viewing prices moving sideways or neutral.