GOLD PRICE NEWS - The gold price is higher this morning, trading up 6.50 at $1,188.80 per ounce while stock futures and commodity prices are under heavy selling pressure. The price of gold hit a high of $1,190 per ounce this morning after trading as lows as $1,178 overnight.
Strength in the gold price is occurring against the backdrop a strong dollar, which is hitting its highest level in eleven months against a basket of its trading partners. The Dollar Index (DXY) traded up to 82.94 this morning, driven by weakness in the euro.
Despite this past weekend’s announcement that the European Union and International Monetary Fund will provide Greece with a $146 billion rescue package, investors and traders have continued to sell the euro. At 1.308 versus the U.S. dollar, the euro is hitting a new 52-week low. The euro-denominated gold price is hitting yet another all-time record high this morning, breaking above 906 per ounce. Gold is breaking out in nearly all global currencies, as the price of gold in terms of Japanese yen is trading at its highest level since February of 1983.
Concerns that the bailout is merely a short-term solution have intensified and Greek government debt has come under selling pressure once again. Greek citizens are not reacting well to the proposed austerity measures as strikes and violence have erupted in the country protesting the spending and pay cuts.
While the immediate threat of default has been removed, the market appears to be in agreement with commentator, Dennis Gartman, who wrote yesterday in the Gartman Letter, “It is but a matter of time until Greece does default, for her citizens will not accept the measures that shall be imposed upon them.”
In contrast to the counter-cyclical gold price, the more economically-sensitive commodity complex was chiefly lower this morning. Copper hit a nine-week low, breaking under $3.25 per pound, while oil slid back under $85 per barrel. Volatility has picked up in recent days in both the stock and commodity markets. S&P 500 stock futures were lower heading into the open, down 8.70.
Earnings continue to be released from the gold mining producers. Yamana Gold (AUY) reported its first quarter earnings last night, which, at $0.10 per share, were roughly in-line with consensus estimates. Gold production was 239,838 gold-equivalent ounces at $161 cash costs. Yamana maintained it 2010 guidance of 1.03 to 1.145 million gold-equivalent ounces. Shares of AUY were near unchanged levels in premarket activity Tuesday.
The gold stocks have been one of the strongest sectors of the market over the past two weeks as positive earnings reports from Barrick Gold (ABX) and Newmont Mining (NEM), combined with an up-trending gold price, have given a boost to the sector.
