GOLD PRICE NEWS – The gold price declined $10.04, or 0.6%, to $1,665.85 per ounce Friday morning amid a disappointing report on Chinese GDP and a stronger U.S. dollar. The spot price of gold held in a narrow range between roughly $1,670 and $1,680 in overnight trading, but turned modestly lower as the U.S. Dollar Index rose 0.7% to 79.798 against a basket of foreign currencies.
Silver retreated alongside the price of gold, by $0.37, or 1.1%, to $32.02 per ounce. Other precious metals headed south as well, with platinum futures sliding 0.6% to $1,596.85 per ounce and palladium dipping 0.3% to $651.05 per ounce. Among cyclical commodities, copper dropped 2.2% to $3.64 per ounce and crude oil fell 0.6% to $103.03 per barrel.
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Gold shares sunk in concert with the broader equity markets, as the Market Vectors Gold Miners ETF (GDX) slipped 0.9% to $47.70 per share. Barrick Gold (ABX), the world’s largest gold producer, fell $1.0% to $41.79 per share. Newmont Mining (NEM), the largest U.S.-based gold miner and the only gold stock included in the S&P 500 Index, bucked the trend however by rising 0.3% to $49.68 per share.
The Dow Jones Industrial Average (DJIA) opened slightly lower, but extended its losses to 0.7% at 12,893.87 after worse than expected data on U.S. consumer sentiment. The University of Michigan Consumer Sentiment Index for April came in at 75.7 – below the 76.2 consensus estimate among economists. Investor risk aversion moved higher after the report, with the CBOE Volatility Index (VIX) climbing 10.1% to 18.94.
China’s first quarter GDP report was the primary catalyst for the markets’ weakness, however. At 8.1%, the Chinese economy grew at a slower pace than the 8.3% rate economists were expecting, and marked the lowest growth rate in 11 quarters. The disappointing report led to broad-based selling in stocks and commodities, following two straight days of gains.
As for the price of gold, Standard Bank analyst Walter de Wet wrote in a note to clients that “Especially in the United States, the investment climate is very neutral towards gold at this stage. People really need to see a policy catalyst before they come back aggressively.”
“On the physical side, from the end of this month there is really no seasonal demand coming until August,” de Wet asserted. “It is going to be difficult to break much higher if we don’t have this physical buying supporting any investment demand coming through for the next two or three months.
Credit Suisse analyst Tom Kendall offered a similar, albeit somewhat more constructive outlook on the gold price in a recent commentary. “It’s a market that is more or less being pinned in dollar terms to the $1,650 level for a while,” he contended. “The next move, I suspect, is going to be higher, but the market is fairly susceptible to headlines at the moment.”
“Volumes are very thin, by and large,” Kendall added, “and the key really from here is for something to give gold a push up through $1,675/1,680 and above there, you would start to see some more activity.”
