On Wednesday, gold (NYSEARCA:GLD) futures for April delivery, the most active contract, increased $5.30 to settle at $1,678.80 per ounce, while silver (NYSEARCA:SLV) futures for March were unchanged to close at $31.88.
Gold prices edged higher ahead of the European Central Bank monthly meeting and press conference on Thursday. The central bank is expected to keep interest rates at record lows, which is providing weakness to the euro, but support to the U.S. dollar index.
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Ongoing political risk is also serving as a headwind for the euro zone. Christopher Vecchio, currency analyst at DailyFX, explains, “Political headlines out of the Euro-zone are beginning to heat back up, putting further downside pressure on the Euro. Needless to say, the implicit endless support of the ECB’s balance sheet assuaged fears among bond holders, which has helped push Italian and Spanish borrowing costs to their lowest levels in two years. While the lower yields have bought the Italian and Spanish government time, one major problem that both countries to face is worsening structural unemployment. Like in the case of Greece, social unrest is rooted in diminished standards of living, declining purchasing power, and lower incomes.”
In afternoon hours, the SPDR Gold Trust (NYSEARCA:GLD) gained 0.25 percent, while the iShares Silver Trust (NYSEARCA:SLV) traded flat. Gold miners (NYSEARCA:GDX) such as Newmont Mining (NYSE:NEM) and Barrick Gold (NYSE:ABX) jumped more than 1 percent. Silver names such as Pan American Silver (NASDAQ:PAAS) and First Majestic Silver (NYSE:AG) increased 0.75 percent and 0.95 percent, respectively.
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Disclosure: Long EXK, AG, HL, PHYS