IBT: Gold Price Firm, Dollar Retreats on Housing Data
GOLD PRICE NEWS – The gold price advanced $6.85, or 0.4%, to $1,645.25 per ounce Tuesday morning as the U.S. dollar Index fell by a modest 0.3% to 79.155. Silver rose alongside the price of gold, by $0.18, or 0.6%,t o $31.08 per ounce. Strength in precious metals and the dollar’s weakness was driven in part by worse than expected data on the U.S. housing market. The S&P/Case-Shiller index of home prices fell by 3.5% in February, slightly below the 3.4% consensus estimate among economists. The broader equity markets shrugged off the disappointing data, however, as the S&P 500 Index inched higher by 0.2% to 1,369.22.
On Monday the gold price initially dropped to as low as $1,622.10 per ounce as global economic concerns led to broad-based liquidation in financial markets. However, the price of gold bounced back as the U.S. dollar pared its gains against a composite of foreign currencies, to close down by just $4.22, or 0.3%, at $1,638.40 per ounce. The SPDR Gold Trust (GLD), the sector’s largest gold ETF and a proxy for the gold price, settled lower by $0.47 at $159.07 per share.
Silver posted a considerably larger loss than the price of gold, as it slipped $0.78, or 2.5%, to $30.90 per ounce. In doing so, gold’s sister precious metal fell to its lowest level since January 20th of this year. On a year-to-date basis, the prices of gold and silver are now higher by 4.8% and 11.5%, respectively.
Commenting on the outlook for the yellow metal, Nick Trevethan, senior commodities strategist at ANZ Bank, wrote in a note to clients that “Gold doesn’t seem to be trading on anything other than externally derived sentiment. There is still pressure for gold prices. The market has been trying to push the support level at $1,630-$1,640, although the push is rather half-hearted right now.”
Gold shares continued to struggle despite the modest gold price rebound on Monday, as the Market Vectors Gold Miners ETF (GDX) finished down by $1.08, or 2.3%, at $45.04 per share. With its retreat, the GDX reached another new multi-year low and extended its year-to-date loss to 12.4%. Notable decliners yesterday included Goldcorp (GG), Newmont Mining (NEM), and Randgold Resources (GOLD). GG settled down by 3.2% at $40.04, NEM by 2.0% at $46.30, and GOLD by 3.0% at $84.53 per share.
The broader equity markets also tumbled yesterday morning, as the S&P 500 Index sunk as much as 1.4% to 1,358.79 before paring its losses into the close of trading. European sovereign debt concerns fueled the sell-off, stemming from the first round of presidential results in France and the pending resignation of Dutch Prime Minister Mark Rutte. Investor risk aversion turned sharply higher in the process, evidenced by the CBOE Volatility Index (VIX) jumping 8.8% to 18.97.
Looking ahead for the gold price, it is likely to stabilize ahead of Wednesday’s Federal Reserve meeting, according to Standard Bank’s head of commodity trading, Yuichi Ikemizu. “We probably won’t see much move before the Fed meeting,” Ikemizu stated, “as people are sidelined and waiting for new cues from the Fed and Bank of Japan.”
