Gold extends gains, while silver fell further

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On Tuesday gold advances for a second day. Gains came after data the dollar fell due to weak US data. The disappointing numbers raised worries about a bumpy recovery in the U.S., the largest global economy.

Though, investors took steady positions in anticipation of the coming Friday payrolls numbers release, which will provide more data about the US pickup strength.

Meanwhile, silver rolled off into the bear markets. The tumble is driven by signs that expanding supplies will outmarch demand in time of growing concern that global growth will stumble.

On the New York Comex division silver futures for May delivery dropped by 1.3% to trade at $27.944 per ounce. On 4th October, silver closed at $35.101 per ounce, but since then the price is down nearly 20%. For long term investors, the current levels translate into a great entry opportunity.

By 02:53 GMT gold climbed up by $3.01 to settle at $1,601.41 per ounce. In March, the metal rallied to a 1-month high. That was on the back of European fiscal stability concerns brought by politicians struggle to find a bailout for Cyprus.

The US gold for June delivery gained $1.10 to trade at $1,602.00 per ounce.

According to technical analysis, the current gold sentiment is rather neutral. It is not very likely that prices could break the $1,620-$1,625 threshold. Yet, on the downside the floor is seen at the range of $1,590-$1,585 per ounce.

Experts believe that the US economy will definitely continue its recovery. The economy is still improving. Sometimes it happens faster while sometimes things happen slower. Strengthening economy numbers added to the recent pickup in stock markets. Stocks hit record highs on both the Dow and S&P 500. Theoretically stronger stock markets tend to push gold and silver investors into equities.

In March the US factory activity grew at the slowest rate in three months. That was a sign that the economy lost its pace at the first quarter end.

This data prompted investors to sell their dollars. In respect the Japanese yen rose to a one-month high against the US currency. Meantime for the first time in three weeks Japan’s Nikkei stock average fell by 1.8% to below the key 12,000-mark.

Imports by China, the biggest user of silver after the US, dropped the most in two years in February. The latest customs data showed that this was the fifth decline in six months. In April 2011 silver reached a 31-year high as global central banks expanded the monetary easing. That propelled the silver’s inflation hedge appeal.

On March 26, the Comex inventories of silver monitoring hit the highest since August 1997. Though, American Eagle silver coin sales by the US Mint fell for two straight months.

Traders and investors are looking ahead to Friday’s release of the U.S. employment report, which is arguably the most important US economic data for April. Therefore, we can expect stronger moment in precious metals market on Friday.

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