Gold Price, Markets Tumble as Euro Concerns Escalate Further

GOLD PRICE NEWS – The gold price turned lower on Thursday, weighed down by a rebound in the U.S. dollar and weakness in the broader financial markets.  The spot price of gold fell by as much as $24.14, or 1.5%, to $1,550.94 per ounce this morning before consolidating near $1,553 per ounce.

The U.S. Dollar Index (DXY) – which measures the greenback against a basket of the world’s other leading currencies – slipped to 82.41 in overnight trading, but later bounced back into positive territory at 82.92.  The euro currency was unable to retain its gains, as it dropped 0.2% to 1.2440 against the dollar.

Silver retreated in conjunction with the gold price, by $0.43, or 1.6% to $26.53 per ounce.  Gold and silver shares tumbled as well, with the Philadelphia Gold & Silver Index (XAU) sliding 2.8% to 151.09 – its lowest level since May 23rd.  Two of the largest decliners in the XAU this morning were IAMGOLD (IAG) and Silver Standard Resources (SSRI) – which fell by 4.4% to $11.32 and by 4.1% to $10.95 per share, respectively.

U.S. equity markets followed European exchanges into the red on Thursday, with the Dow Jones Industrial Average (DJIA) down by 162.80 points, or 1.3%, at 12,464.20 and the S&P 500 Index lower by 10.67 points, or 0.8%, at 1,321.18.  The sell-off coincided with a considerable uptick in investor risk aversion, as the CBOE Volatility Index (VIX) jumped 8.4% to 21.08.

The broader markets showed a negative reaction to the latest U.S. weekly jobless claims data, which at 386,000 came in slightly above the 385,000 consensus estimate among economists.  Last week’s jobless claims figure was revised upward, from 387,000 to 392,000 – the highest level this year.  Jeremy Lawson, senior U.S. economist at BNP Paribas, commented that with regard to the labor market, “There is no progress…There is clearly an underlying weakness that is troubling.”

In Europe, investors grew increasingly disappointed with the potential for meaningful reforms from the two-day European Union (EU) summit that began on Thursday.  These concerns were exacerbated by recent comments from German Chancellor Angela Merkel, who spoke out against proposals by several euro zone nations for the euro zone to assume greater financial responsibility for individual countries’ debts.

As for the gold price, “There’s no semblance of a safe-haven at the moment,” according to Societe Generale analyst Robin Bhar.  ”For the moment people want liquidity so they are selling gold,” he added.

However, Bhar asserted that “As the price goes lower that bid does come back as you maybe get some renewed investor interest – sovereign wealth funds and central banks looking to nibble away and even some physical buying.”