GOLD PRICE NEWS – The gold price fell $10.57, or 0.6%, to $1,653.05 per ounce on Tuesday amid broad-based weakness on Wall Street. Silver fared worse than the price of gold this morning, dropping $0.50, or 1.5%, to $32.45 per ounce. U.S. equity markets moved lower as well, with the S&P 500 Index sliding 0.5% to 1,396.50. Analysts attributed the sell-off to concerns over a slowdown in Chinese economic growth after the nation increased fuel prices by the most in two years. Following last week’s 3.1% decline, the gold price inched higher on Monday by $3.02 to $1,663.62 per ounce. The price of gold jumped from $1,652 to as high as $1,670 as the U.S. dollar turned lower, but the yellow metal pared its gains as trading progressed. The SPDR Gold Trust (GLD), the world’s largest gold price proxy, finished up by $0.29 at $161.59 per share. Like us on Facebook Silver outperformed the price of gold yesterday, as it climbed 1.2% to $32.95 per ounce. In doing so, silver stretched its year-to-date ascent to 18.9%, marking one of the best returns for any asset class this year. The gold price, however, has risen just 6.4% thus far in 2012. Gold shares initially advanced alongside the gold price, but turned modestly lower in afternoon trading. The Market Vectors Gold Miners ETF (GDX) rose to an intra-day high of $50.52 per share before settling down by 0.7% at $49.60. With the sell-off, the GDX fell to within 0.8% of its 52-week low. Two of the larger declining gold stocks on Monday were Agnico-Eagle Mines (AEM) and AngloGold Ashanti (AU), which dropped 1.9% and 1.5%, respectively. In stark contrast to the gold sector, the broader U.S. equity markets reached yet another new set of multi-year highs. The S&P 500 Index rose 0.4% to 1,409.75, its best closing level since May 20, 2008. Investor risk aversion remained particularly subdued as well, with the CBOE Volatility Index (VIX) continuing to hover near a five-year low. Although the gold price moved only marginally higher on Monday, it received a boost from comments by William Dudley, President of the Federal Reserve Bank of New York. In a speech on the state of the U.S. economy, Dudley cautioned that despite the recent upswing in economic data, “real economic activity has yet to be strong enough on a sustained basis to make a big dent in the overall amount of slack in the U.S. economy.� Dudley – considered one of the foremost dovish Fed members alongside Chairman Ben Bernanke –cited worrisome components of recent employment and GDP reports to support his argument. “While it is true that growth was stronger in the fourth quarter, most of that growth was due to inventory accumulation. Growth of final sales was actually quite weak… Although the sharp decline in the unemployment from 9 percent last September to 8.3 percent in February suggests we are doing better than that, it is important to recognize that about half of that decline was due to a declining labor force participation rate. In fact, had the labor force participation rate not declined from around 66 percent in mid-2008 to under 64 percent in February, the unemployment rate would still be over 10 percent.� While the New York Fed President did not discuss the implications of his economic assessment for monetary policy, several market strategists asserted that the potential for a third round of quantitative easing (QE3) remains substantive. Dan Greenhaus, chief global strategist at BTIG, wrote in a note to clients that “This was not a speech from a man convinced that QE3 was not going to happen with total certainty.� In addition to Dudley’s speech, the price of gold was buoyed by reports over the weekend of central bank buying. According to Reuters, which cited sources that spoke on conditions of anonymity, approximately $250 million of physical gold was purchased last week by central banks through the Bank for International Settlements. The latest activity followed significant buying in 2011, when central bank gold purchases surged to their highest level since the end of the gold standard in 1971.

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