Recent media reports focusing on the Federal Reserve and European Central Bank stated that plans for more monetary easing are on the table. Gold focused exchange traded funds have held steady as prices remain above $1,600 per ounce, but silver has inched down as economic growth remains flat.
“Gold has shown itself sensitive to monetary policy announcements this year and any indication of further easing would buoy gold prices,” James Steel, HSBC precious metals analyst said, on Investorplace.
iShares Silver Trust (NYSEArca: SLV) rose more than 1.2%, while silver futures prices fell 0.8% to $27.25 per ounce, reports FXY News. [Silver ETF Hits 19-Month Low But Investors Aren’t Running for the Exits]
Gold rose on the news the the European Central Bank will do “whatever it takes” to preserve the euro. Gold is trading around $1,619 an ounce in Friday trading. The SPDR S&P Gold Trust (NYSEArca: GLD) and iShares Gold Trust (NYSEArca: IAU) gained 0.7% on Thursday, reports Angela Nazworth on Investorplace.
The Federal Reserve has put any action toward more quantitative easing on hold, but the possibility for more monetary easing in the U.S. is more of a reality than a few months ago. Gold is treated as a currency and a safe haven, and has maintained its value throughout the year. [ETF Chart of the Day: Gold]
Economic issues in Europe are far from solved, and as serious conditions loom overseas there are fewer and fewer options left to stimulate economies. Therefore, further monetary easing is not ruled out.
Silver has not been able to keep the same stamina that was seen in 2011, and performance has not been parallel to gold. Some of this is attributed to the metals’ industrial qualities that are tied tightly to economic growth. [Gold ETFs and the Eurozone Debt Crisis]
“We’ve got expectations that the Fed is going to do something or at least say something next week, and there’s talk that China is ready to implement new easing steps,” Frank Lesh at FuturePath Trading said. Adding the chance that the ECB may take new steps, Mr. Lesh said that “you have the three central banks of the world’s largest economies maybe going to throw some more money at the problems.”
Tisha Guerrero contributed to this article.