Gold Price Firm on Further Disappointing Economic Data

GOLD PRICE NEWS – The gold price held firm near $1,625 per ounce Friday morning after several worse than expected U.S. economic reports.  Yesterday the price of gold advanced modestly after reports surfaced that the world’s leading central banks were prepared to take coordinated action if necessary to stabilize financial markets in the aftermath of this weekend’s Greek elections.  The SPDR Gold Trust (GLD), a proxy for the gold price and the largest gold ETF, inched higher in morning trading by $0.17 to $157.92 per share.

Additional signs appeared this morning that the U.S. economy continues to meaningfully slow.  Industrial production in May fell 0.1%, below the 0.1% increase economists were expecting.  The Empire Manufacturing Index for June came in at 2.29, well short of the 12.50 consensus estimate among economists and the 17.09 level in May.  Lastly, the University of Michigan Consumer Sentiment Index fell from 79.3 in May to 74.1 in June – a six-month low and well beneath the 77.5 level forecasted by economists.

Coupled with yesterday’s disappointing jobless claims figures and lower than forecast Consumer Price Index (CPI) data, today’s economic figures are likely to provide the Federal Reserve with even more evidence to support its dovish stance.   With next week’s Fed meeting fast approaching, an increasing collection of economists are expecting Ben Bernanke and his fellow central bankers to implement some form of additional monetary easing.  Such expectations have helped the price of gold stabilize near a five-week high.

Silver held near unchanged at $28.70 per ounce alongside the gold price and other precious metals on Friday.  Platinum futures rose 0.4% to $1,493.50 per ounce, while palladium inched higher by 0.1% to $635.25 per ounce.  Cyclical commodities posted fractional gains as well, with copper futures up by 0.9% at $3.38 per pound and crude oil rising 0.2% to $84.11 per ounce.

Commenting on the outlook for the gold price, VTB Capital analyst Andrey Kryuchenkov wrote in a note to clients that “Not many will dare take on fresh longs ahead of the weekend given gold’s peculiar behavior recently, when it swings back and forth with or against risk sentiment…We should stall near this week’s highs below 1630, with all attention on Greece, and then the G20 summit next week.”

Gold shares also hugged the flatline in conjunction with the price of gold, as the Market Vectors Gold Miners ETF (GDX) dipped $0.02 to $46.91 per share.  The large-cap gold producers were mixed in morning trading, with Randgold Resources (GOLD) up by 1.5% at $93.33 per share, Yamana Gold (AUY) down by 0.9% at $16.17 per share, and Newmont Mining (NEM) unchanged at $50.69 per share.

In contrast to the gold sector, the broader equity markets clung to modest gains, with the S&P 500 Index rising 0.4% to 1,334.67.  In the currency markets, the U.S. Dollar Index (DXY) fell 0.3% to 82.10, while the euro rose 0.2% to 1.2631 against the dollar.