Gold Price Dips on Dollar Strength, Euro Concerns

GOLD PRICE NEWS – The gold price added to yesterday’s losses on Friday morning amid further strength in the U.S. dollar and broad-based weakness in financial markets.  The spot price of gold fell $14.45, or 0.9%, to $1,577.45 per ounce following yesterday’s 1.7% sell-off.  The SPDR Gold Trust (GLD), the sector’s largest ETF and a proxy for the gold price, slid $1.31, or 0.9%, to $153.19 per share this morning.  The U.S. Dollar Index (DXY) jumped 0.9% to 82.813 as further sovereign debt worries in Europe put pressure on the euro currency in particular.

Silver also built on its decline from Thursday, as it retreated $0.38, or 1.3%, to $28.27 per ounce on Friday.  With today’s sell-off in precious metals, the prices of gold and silver are now lower this week by 2.9% and 0.8%, respectively.  However, on a year-to-date basis the metals remain modestly higher, with gold up 0.9% and silver up 2.0%.

Gold shares opened lower in conjunction with the gold price, but quickly recouped their declines.  The Market Vectors Gold Miners ETF (GDX) initially sunk 2.0% to $45.07, but soon after bounced back into positive territory at $46.14 per share.  However, given the sector’s decline in recent days, the GDX was on pace to finish the week lower by 1.5%.

Barrick Gold (ABX), the world’s largest gold mining company, rose 0.4% to $38.95 per share this morning.  Other notable advancers included Agnico-Eagle Mines (AEM) and Yamana Gold (AUY), which added 0.3% to $39.84 and 0.7% to $15.80 per share, respectively.  One large-cap gold producer moving lower was Newmont Mining (NEM) – the only gold stock included in the S&P 500 Index – which slipped 0.6% to $50.02 per share.

As for the broader U.S. markets, they remained moderately lower in concert with their European counterparts.  The Dow Jones Industrial Average (DJIA) dipped 26.15 points, or 0.2%, to 12,434.80 while the Russell 2000 inched down by 1.02 points, or 0.1%, to 759.32.  Nonetheless, the Dow Jones remained on track for its best week in several months, as it has climbed 2.6%.

Yesterday the gold price turned sharply lower after Fed Chairman Ben Bernanke did not suggest in congressional testimony that a third round of quantitative easing (QE3) was forthcoming.  Looking ahead, the markets are likely to turn their attention back to the European sovereign debt crisis.

This morning, Reuters reported that euro zone finance ministers will hold a conference call on Saturday “to discuss a Spanish request for an aid package for its ailing banks, although no figure had yet been set.”

If Spain were to receive a financial bailout, it would follow in the footsteps of the other PIIGS – including Portugal, Ireland, and Greece.  However, officials noted that a rescue package would only provide aid to the nation’s banking system rather than its federal government.