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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.
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.
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 day.
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