On Monday, spot gold advanced as much as 0.4 % to $1,388.41 before trading at $1,386.04 in Asian trading hours.
Silver traded 0.5 % up at $21.7715 after declining 4.4 % on June 7, the biggest drop at close since April 15.
The white metal traded sideways for three weeks, but broke lower on Friday. It is very much possible to continue to trade lower and to re-taste Friday lows at around 21.46. A break lower could not be ruled out, and could target 21.19 or even 20.98 level. An upside break could target 22.35 and further 22.60.
Market participants need to consider the impact of the recently released weak economic data in China. The country’s IIP stands at 9.2 % in May from a year earlier and factory-gate prices fell for a 15th month. China exports were at a 10-month low and imports dropped.
Economic trends in the U.S. have been positively skewed recently which has boosted investors’ optimism. The primary U.S. stock composites are all up by about 15 percent for the calendar year so far. The economic based confidence has diminished demand for precious metal safe havens. The primary U.S. stock composites in the U.S. are positive for the calendar year so far and precious metal gold and silver price trends are in the red.
Alan Greenspan, a former U.S. Federal Reserve chairman, said that the Fed’ needs to begin cutting back on QE3″. A week earlier, Goldman Sash said that this would likely happen from September onwards. However, silver is not considered as a hedge against inflation and not a subject of Central Banks buying.
Investment funds net-long position on gold went up by 19 % to 57,113. Gold ETFs fell 1.3 MT to 2,135.866 MT ( May 2011 low).
An advancing gold price may push the white metal’s price to a higher level.
