Gold Price Climbs after GDP Report, Fed Meeting

Gold Price Climbs after GDP Report, Fed Meeting



GOLD PRICE NEWS – The gold price turned higher on Wednesday after a disappointing U.S. GDP report and maintained its gains following the latest Federal Reserve meeting.  The spot price of gold advanced to an intra-day high of $1,682.87 per ounce before settling up by $12.84, or 0.8%, at the $1,676.07 level.  Gold prices were also boosted by weakness in the U.S. Dollar Index (DXY), which fell by 0.4% to 79.258 against a basket of the world’s most-traded currencies.

Silver outperformed the price of gold, as it jumped by $0.68, or 2.2%, to $32.06 per ounce.  Gold and silver stocks initially rallied alongside precious metals, but later turned south in conjunction with the broader equity markets.  The Philadelphia Gold & Silver Index (XAU) closed lower by 0.5% at 150.95 while the S&P 500 Index slid by 0.4% to 1,501.96.

Among widely-traded gold stocks, notable decliners included XAU components Barrick Gold (ABX), Goldcorp (GG), and IAMGOLD (IAG).  Shares of ABX dropped by 1.3% to $32.39, GG by 0.4% to $35.94, and IAG by 2.6% to $8.27.

The price of gold held steady in early morning trading, but surged higher after the latest U.S. GDP report showed that the nation’s economy contracted by 0.1% in the fourth quarter of 2012.  The negative reading was the first of its kind since the third quarter of 2009, and well below the 1.1% consensus estimate among economists.

Later on in the day, Federal Reserve Chairman Ben Bernanke and his peers on the Federal Open Market Committee (FOMC) decided to stand pat with their set of accommodative monetary policies.  Specifically, the Fed chose to maintain its quantitative easing program at $85 billion per month and reiterated its 6.5% unemployment rate threshold with respect to eventually raising the Federal Funds rate.

Commenting on the outlook for the price of gold in light of today’s events, analysts at Standard Bank wrote in a note to clients that “We feel it is important to note that the Fed’s balance sheet is only one piece in a puzzle of growing liquidity and negative real interest rates…Strategically we remain bullish on gold over the long term. The cost of holding gold relative to cash remains negligible.”

Gold Prices Await Busy Week of U.S. Economic Data

Gold Prices Await Busy Week of U.S. Economic Data



GOLD PRICE NEWS – The gold price inched lower on Monday amid further weakness in precious metals and a modest advance in the U.S. dollar.  The spot price of gold dipped $4.46, or 0.3%, to $1,654.94 per ounce while the U.S. Dollar Index rose by 0.1% to 79.813.  The SPDR Gold Trust (GLD), the world’s largest gold price proxy and gold ETF, fell $0.46, or 0.3%, to $160.19 per share.

Silver fared worse than the price of gold, as it slipped by $0.43, or 1.4%, to $30.81 per ounce.  Among other precious metals, platinum futures dropped by 1.5% to $1,670.01 per ounce, while palladium bucked the trend with a 0.3% rise to $743.50 per ounce.  As for cyclical commodities, copper futures advanced by 0.2% to $3.66 per pound while crude oil added 0.3% to $96.18 per barrel.

Gold stocks came under selling pressure alongside the gold price, as the Market Vectors Gold Miners ETF (GDX) retreated by $0.32, or 0.8%, to $41.60 per share.  The sector also lagged the broader equity markets, as the S&P 500 Index fell by just 0.1% to 1,501.19.

Notable gold stocks in the red included GDX components Harmony Gold (HMY), Kinross Gold (KGC), and Newmont Mining (NEM).  Shares of HMY slid by 2.7% to $6.79, KGC by 2.6% to $8.31, and NEM by 1.4% to $42.67.

Looking to the week ahead, the U.S. economic calendar is particularly full of items likely to impact the price of gold and the broader financial markets.  This morning, Durable Goods for December increased by 4.6%, well above the 2.5% consensus estimate among economists.  However, Pending Home Sales for last month declined by 4.3%, missing the unchanged mark economists were expecting.

Tomorrow’s schedule includes the Case-Shiller home price index, along with a report on Consumer Confidence.  On Wednesday, data on fourth quarter GDP and the ADP Employment report will be released, as well as the always-critical Federal Reserve’s Federal Open Market Committee (FOMC) meeting and monetary policy decision.  Thursday’s docket includes reports on Weekly Jobless Claims and the Chicago Purchasing Managers’ Index, and the week then concludes on Friday with the Nonfarm Payrolls Report, Unemployment Rate, University of Michigan Consumer Sentiment Index, and the ISM Index.

Commenting on the outlook for gold prices, Frederic Panizzutti stated that “The market is on hold ahead of the U.S. Federal Reserve’s meeting, and expects comments on further quantitative easing measures…Today’s trade should be pretty quiet, with gold players watching euro/dollar movements, looking for any indication of what is going to happen in the next few days.”

Gold Price, Silver Firm after Mixed U.S. Jobs Report

Gold Price, Silver Firm after Mixed U.S. Jobs Report



GOLD PRICE NEWS – The gold price swung between gains and losses on Friday as financial markets weighed the impact of a mixed U.S. employment report and other positive economic data.  The spot price of gold traded in a range between $1,662 and $1,683 per ounce following the January non-farm payrolls report.  This afternoon, the gold price traded higher by $4.15, or 0.3%, at $1,669.28 per ounce.

Gold prices initially reacted in a positive manner to the latest jobs data, jumping from near $1,664 to their intra-day high of $1,683 per ounce.  However, the yellow metal later relinquished the majority of its gains as the U.S. dollar rallied following better than expected reports on the ISM Manufacturing Index and University of Michigan Consumer Sentiment Index..

As for the employment data, non-farm payrolls showed a gain last month of 157,000 – above the 165,000 consensus estimate among economists.  The unemployment rate also ticked up to 7.9%, surpassing the 7.8% level at which economists were expecting it to remain.

While the headline figures were worse than expectations, revisions to the two prior months’ of data was quite encouraging.  Employment gains in December of 2012 were revised upwards from 155,000 to 196,000 an in November of last year from 161,000 to 247,000.

Silver reacted more positively to the jobs report than did the price of gold, as it jumped by $0.47, or 1.5%, to $31.95 per ounce in afternoon trading.  Gold and silver stocks turned higher as well, buoyed by a combination of strength in precious metals and the broader equity markets.

The Philadelphia Gold & Silver Index (XAU) added 1.4% to 151.74 while the S&P 500 Index rose by 1.1% to another new four-year high of 1,514.41.  In addition, the Dow Jones Industrial Average (DJIA) eclipsed the 14,000 level for the first time since October of 2007 and came within 1.3% of its all-time high of 14,198.10.

Among widely-traded gold and silver stocks, notable advancers included XAU components Anglogold Ashanti (AU), Newmont Mining (NEM), and Silver Wheaton (SLW).  Shares of AU climbed by 4.3% to $29.23, NEM by 1.6% to $43.64, and SLW by 1.9% to $35.49.

Gold Prices Hover at $1,600

Gold Prices Hover at $1,600



GOLD PRICE NEWS – The gold price traded near unchanged Tuesday morning at $1,609 per ounce.  Gold prices have moved lower in recent weeks, punctuated by last week’s 3.7% decline.  The sell-off has been driven by heavy selling in the futures markets on the back of the perception that the U.S. economy is healing.  Investors are beginning to price in the end of the Federal Reserve’s quantitative easing program despite the fact that growth remains subdued.  Also helping to fuel selling and drive the price of gold lower is the news that high-profile institutional investors George Soros and Julian Robertson reduced their stake in SPDR Gold Trust (GLD) in the fourth quarter of 2012.

Silver has followed the price of gold lower, sliding 6.1% in the month of February alone.  Despite the recent weakness, there are tentative signs that physical demand is picking up near current levels.  According to TD Securities, “China has returned from its Lunar New Year celebrations with appetite for the precious metals with volumes on the Shanghai Gold Exchange touching new record levels.”  Despite this fact, TD did highlight the technical damage that is plaguing the price of gold, noting, “Gold’s 50-day moving average looks set to cross below the 200 day moving average, which has potential to precipitate a $150 move lower.  This occurred the last time the two moving averages crossed to the downside, in April of last year.  For now, gold support remains at $1600 and silver around $29.50.”

Investors and traders will now focus on Wednesday’s release of minutes from the Federal Reserve’s January 29-30 meeting.  Specifically, they will be looking for clues that the current $85 billion per month quantitative easing program will be terminated.  Any hint that the Fed’s ultra-easy monetary policy is set to end would likely lead to further selling in gold.  However, with much bad news prices into the gold market, the perception that the Fed will continue to keep the monetary spigots open could lead to selling in the U.S. dollar and a rebound in the price of gold.  Volume has been heavy in both gold and gold mining stocks with futures trading volume almost triple the average in the past one hundred days, adjusted for seasonality.

Gold mining stocks have been under heavy selling pressure in 2013.  Friday’s 3.5% drop in the Market Vectors Gold Miners ETF (GDX) comes on the back of weakness that goes all the back to 2011.  JP Morgan noted, “We continue to feel gold equities are in transition from pure growth and are seeking to be quality yield vehicles. Friday’s gold equity weakness probably represented concern that this transition will take a while. Gold equities were the favored way to participate in gold’s bull market that saw the metal outperform the S&P 500 and Dow by ~453% and ~435% respectively since 2000.”  The investment bank’s metals and mining research team sees this outperformance continuing: “Given the policies being followed by central banks to stimulate economic growth, it’s difficult to believe that gold should stop outperforming.”

The earnings calendar is heavy for the gold producers this week with AngloGold Ashanti (AU), Yamana Gold (AUY), and IAMGOLD (IAG) all reporting on Wednesday and industry bellwether Newmont Mining (NEM) set to release on Thursday.

Gold Price Climbs, Miners Follow

Gold Price Climbs, Miners Follow

GOLD PRICE NEWS – The gold price climbed $6.50 to $1,587 per ounce Monday morning, advancing on the back of a flurry of supportive macro-economic news.  Stifel Nicholas highlighted “headlines that Russian and Kazakhstan gold purchases are up, UK debt has been downgraded, Japan goes ahead with “easing” nominee” and “the US Adjusted Monetary base is up…again.”  Silver followed the price of gold higher, rising roughly 1% to $28.95 per ounce.  The U.S. dollar traded weaker against the euro, reversing some of the strong gains witnessed in 2013.

Gold mining stocks rebounded Monday after another steep drop last week, which saw the gold stocks sink 4.9%, as measured by the Market Vectors Gold Miners ETF (GDX) and 5.8%, as measured by the Market Vectors Junior Gold Miners ETF (GDXJ).  Weakness in the gold price, combined with disappointing operating performance by the gold producers, has weighed heavily on the sector’s stock prices in recent months.  The GDX and GDXJ rose 1.7% and 2.4%, respectively, in early trading Monday morning.

Hecla Mining (HL), an industry stalwart, released their fourth quarter earnings this morning.  JP Morgan noted, “Hecla delivered in-line Q4 earnings with higher-than-expected production, albeit at lower realized silver price and higher cash costs due to lower byproduct credits. It announced the reopening of its Lucky Friday mine last week, and this is expected to deliver over 2moz of silver in 2013, although costs are expected to be high as it ramps up. Its 2013 production outlook is in line with our expectations, and the company is expecting to spend 28% more towards capex in 2013. The company also reported a modest 2% increase in its proven and probable reserves and a 33% increase in its mineralized and inferred gold resources.”

Argonaut Gold (AR) announced 2013 guidance this morning of 120,000 – 140,000 ounces at cash costs of between $630 and $660 per ounce.  Scotia noted these numbers were close its analyst’s expectations of “132.3 koz at $613/oz.”  Scotia’s metals and mining team also commentated that “the company now guides to 2013 capex of $57M-$75M vs. expectations of $49M.”

The Global Precious Metals at TD Securities highlighted the surge in short positions on gold, which was revealed in the CFTC’s Commitment of Traders report. TD noted, “Gold (Futures and Options) speculative shorts jumped by 34% while silver shorts more than doubled to add 74% to the speculative position.  The gold net speculative long (futures) position is now at its lowest level since before the Global Financial crisis – June 2007 while speculative shorts (futures and options) are at their highest since April 1999 when the gold price was just $286.00 / Ounce!”

Martin Murenbeeld, Chief Economist at DundeeWealth Economics, noted that gold’s 50-day moving average broke down through its 200-day moving average – the so-called “death cross” – for the sixth time since June 2001.  Murenbeeld urged his clients to focus on Fed Chairman Bernanke’s Humphrey Hawkins Testimony (February 26-27) for clues as to the futures direction of monetary policy. Dundee’s chief economist expects Bernanke to “confirm that QE4 will not be altered much before yearend, and while he is unlikely to say why exactly it will almost certainly be because he fears that US economic data (now that the payroll taxes have been hiked and there is sequestering on March 1) will not be very positive for the first half of 2013.”