Gold and Silver Rally Ahead of US Job Data

Gold and silver prices firmed on Tuesday as traders bought into bullion-backed investments. A slowdown in Chinese trading due to the interference of the Lunar New Year, together with uncertainty over economic data coming from the US has raised concerns over the fragility of the stock market.

It seems traders are still in limbo and are having to make some tough decisions over their buy and sell positions. Central banks are eager to get their national economies running, but the engine keeps stalling. 

Trading days are not likely to improve until the US employment market shows signs of economic recovery. 

The SPDR Gold Trust shifted 3.9 tonnes yesterday and pushed gold spot prices up to 0.3 per cent to almost $1258 per troy ounce, their best performance since Christmas day! Silver faired even better with a 0.9% increase to $19.62.

Traders waiting data

Investors are expected to continue on their current spending trend until the US job figures are published on Friday. Negative results will have a diverse affect on the equities market and push up gold and silver prices.

After the disappointing news on Wednesday morning showing the ADP National report on private hiring in the US is not encouraging, gold is already attracting buyers.

In Europe, gold stocks pulled back to their best price in seven months, drawing a question mark over how well the global economy is really performing. Whilst the pound sterling in the UK is going from strength to strength, investors are concerned about hyper-inflation in the Eurozone despite the currencies fine form.

But despite the Euro´s surprising surge in strength which started early December, there is still a lack of faith in the European stock markets and traders are not taking any chances. As always, they have put their trust in the safe haven of precious metals.

Buying gold and silver

Gold and silver is often used by traders to hedge their investments against equities that are more of risk. When the economy is performing poorly, or as we are seeing now, does not look secure, precious metals are a strong bargaining chip.

When currencies are weak and economies are performing poorly, gold and silver fair well as investors rely on precious metals to provide some security. Since the price of gold and silver has taken a tumble over the last year, this is a great time to invest.

Although there is widespread uncertainty with the economy at the moment, it is likely that global economies will continue to move in the right direction. The financial beast is only just waking from five years of deep slumber and will take time to get back on all fours.

As the global economy strengthens – which we have to expect it will – gold and silver prices will fall and continue to fall, making 2014 a prime time for investors to improve their investment portfolios. But of course the economy never holds and when it comes crashing down next time, gold and silver prices will enjoy an upward trend that could see precious metals breaking all-time highs!