GOLD PRICE NEWS – The gold price oscillated between gains and losses for the third consecutive day on Wednesday amid a relatively quiet morning for financial markets. The spot price of gold dipped to as low as $1,605.97 per ounce in overnight trading, but bounced back to the flatline near $1,613 despite a modest advance in the U.S. Dollar Index. The euro currency, which has had a large positive correction with the gold price in recent months, fell 0.4% to 1.2347 against the dollar.
Silver stabilized in concert with the price of gold, after trading between $27.66 and $28.11 per ounce this morning. Other precious metals fared slightly worse, as platinum futures retreated by 0.6% to $1,402.60 per ounce and palladium by 0.7% to $583.90 per ounce. Among cyclical commodities, crude oil inched higher by 0.3% to $93.93 per barrel while copper futures slid 0.5% to $3.42 per pound.
Gold shares climbed as the gold price bounced back from earlier losses, with the Market Vectors Gold Miners ETF (GDX) rising $0.34, or 0.8%, to $44.57 per share. Among the large-cap gold producers, two of the best performing names were Kinross Gold (KGC) and Yamana Gold (AUY) – which each added 1.1% to $7.93 and $15.19 per share, respectively.
Since reclaiming the $1,600 per ounce level in late July, the price of gold has consolidated for the past two weeks amid a flurry of central bank meetings, economic data, and further developments in the euro zone sovereign debt crisis. None of these catalysts have been able to propel the yellow metal out of its recent trading range, which has left many strategists predicting further stability as the summer draws to a close.
In a report to clients yesterday, ScotiaMocatta noted that “Gold has been firmly range bound with a degree of upside bias during the past few weeks. The question is this as a result of gold performing as a commodity or as a currency?”
“Well a little of both but Simon (a precious metals strategist at the firm) thinks the bias is towards the latter with gold holding steady on the crosses whilst also attracting ETF (safe haven) demand,” ScotiaMocatta added. “This morning we are above the 400 Day MA at $1608.50 and having just fixed at $1613 also just above the 100 Day MA at $1611.75 so the planets would appear to be in line for further gains towards $1630 which, if we get there he thinks this will prove a tough nut to crack!”
The firm went on to say that “In the big scheme of things the Olympics are clearly the prime focus at the moment and people are keen to feed off the positivity of the games however, the big question remains though as to what will happen when the games are over and the hangover kicks in – only then will we find out if gold is likely to break the wider range.”
The gold price also showed a muted reaction to comments yesterday from Eric Rosengren, President of the Federal Reserve Bank, who called for the Fed to launch an open-ended round of quantitative easing. The program would involve “setting a quantity that you’re going to continue to buy until you get the economic outcomes that you want,” he stated.
ANZ Bank noted that “Gold’s steady showing despite Rosengren’s call for open ended policy action suggests the jury is still out to large extent on Fed policy…The range bound trade of late could well continue until the Fed’s Jackson Hole symposium at the end of the month.”
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