Despite a surge in the US dollar, gold prices were in decline today as investors sold the yellow metal to take profits ahead of tomorrow’s policy meeting of the Federal Reserve.
The price of gold has added more than US$30 per ounce over the past week, driven by speculation that the Fed could consider unleashing a third round of quantitative easing – known as QE3 – to support the recovery, which appears to be running out of steam.
Earlier this month, the Department of Labor reported that the US economy created only 69,000 jobs in May, which undershot even the most pessimistic forecasts. Importantly, the unemployment rate rose to 8.2 percent from 8.1 percent.
Today’s data was mixed with the Commerce Departmentreporting that housing starts dropped 4.8 percent to an annualised rate of 708,000 in May, while permits to build new homes climbed 7.9 percent to 780,000.
More QE would weaken the US dollar, which has an inverse relationship with gold, while boosting gold’s appeal as an inflation hedge.
Gold traded at US$1,623/oz this afternoon, down US$5 from Monday’s close. Other precious metals moved in the opposite direction with silver tacking on six cents to reach US$28.80/oz and platinum rising US$6 to US$1,481/oz.
Today’s top risers in the sector were:
Anglo Asian Mining (LON:AAZ), up 11.5 percent at 41.25 pence at midday
GoldStone Resources (LON:GRL), up 10 percent at 4.1 pence
Chaarat Gold (LON:CGH), up 7.5 percent at 16.41 pence
Angel Mining (LON:ANGM), up 5.5 percent at 1.19 pence
Kryso Resources (LON:KYS), up 28.95 pence
The top fallers were:
Vatukoula Gold Mines (LON:VGM), down 16.5 percent at 30.1 pence at midday
Archipelago Resources (LON:AR.), down 7.5 percent at 48.12 pence
Stratex International (LON:STI), down 6 percent at 5.51 pence
Norseman Gold (LON:NGL), down 3.5 percent at 2.89 pence
