GOLD PRICE NEWS - The gold price opened to the downside, moving toward the $1,130 per ounce level, as worries over the fallout from the SEC allegations against Goldman Sachs weighed on all markets. The 0.5% decline in the price of gold paled in comparison to the 2.8% decline in oil futures, which traded to three-week lows.
Gold stocks were under pressure as well due to the combination of lower gold prices and weaker S&P 500 stock futures, which sent the shares of Barrick Gold (ABX), Newmont Mining (NEM), and Goldcorp (GG) each down over 1% heading into the opening bell.
Worries over a renewed bout of economic populism due to the alleged scandal at Goldman Sachs combined with worries over tighter monetary policy in Asia kept a lid on the gold price. Concerns over how quickly and aggressively Chinese policy makers would move to cool the quickening pace of economic growth and the country’s budding property bubble became more intense following last week’s news that Singapore revalued its currency upward after posting a whopping 32.1% first quarter growth figure.
China’s 11.9% surge in first quarter gross domestic product, its best gain in nearly five years, spurred talk that authorities would move sooner rather than later. Tighter money in emerging markets, or any decline in liquidity from central bankers, represents a threat to not only the gold price, but the entire broader stock and commodity spectrum.
Inflation figures have remained benign in the U.S. and Chairman Bernanke has repeatedly emphasized his commitment to keeping rates low “for an extended period of time” due to ongoing challenges facing the economy.
However, at the same time Bernanke is reiterating his commitment to easy money he is chastising Congress for its loose fiscal policies. As Thomas Donlan wrote in this weekend’s edition of Barron’s, “Bernanke is the man who has done more to put off the day of reckoning than anyone else in the world.” With the spigots still wide open, it is likely that corrections in the gold price will continue to be buying opportunities for those with a longer-term time horizon.
