IBT: Gold Price Stabilizes Following Last Week’s Sell-Off
GOLD PRICE NEWS – The gold price held near $1,655 per ounce Monday morning amidst a relatively quiet opening on Wall Street. The price of gold climbed to as high as $1,664.89 in overnight trading, but relinquished its modest gains as the U.S. dollar turned fractionally higher. Silver stabilized near unchanged at $32.56 per ounce alongside the gold price. U.S. equity markets opened near the flatline as well, with the S&P 500 Index dipping 0.1% to 1,403.33.
On Friday the gold price oscillated between positive and negative territory before finishing higher by $2.20, or 0.1%, at $1,660.60 per ounce. The price of gold initially retreated to $1,640.23, but bounced back amid weakness in the U.S. dollar. Nonetheless, the gold price declined substantially earlier in the week, leaving it lower by 3.0% over the five-day stretch and reducing its year-to-date gain to 6.2%.
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Silver inched higher in concert with the gold price on Friday, by 0.2% to $32.56 per ounce. Earlier in the week silver dropped to a six-week low of $31.63, but rebounded as the week concluded. However, over the prior five days silver still tumbled by 4.9% in total and cut its gain in 2012 to 17.5%.
Weakness in the gold price led to continued strong selling in gold shares, as the Market Vectors Gold Miners ETF (GDX) settled at $49.93 per share on Friday – its lowest level on a closing basis since August 24, 2010. Furthermore, the GDX has now declined in six of the past seven weeks and is lower by 2.9% on a year-to-date basis. Notable decliners this year have included Agnico-Eagle Mines (AEM) and Kinross Gold (KGC), which have fallen 6.5% and 12.5%, respectively.
While gold equities headed further south, the broader markets continued to march higher. The S&P 500 Index climbed 2.4% last week to 1,404.17, its highest level since June 4, 2008, and posted its tenth weekly advance in the past eleven. Concurrent with the markets’ rally has been a significant decline in investor risk aversion, as the CBOE Volatility Index (VIX) reached a five-year low of 13.66 on Friday.
Looking ahead to this week, the U.S. economic calendar is relatively light in terms of data points likely to impact the gold price. However, a few noteworthy reports include Housing Starts on Tuesday; Existing Home Sales on Wednesday; Weekly Jobless Claims and Leading Indicators on Thursday; and New Home Sales on Friday.
