GOLD PRICE NEWS –Gold prices held firm near $1,645 per ounce on Wednesday following yesterday’s rally to their highest level since May 6th. The spot price of gold remained in a narrow range between $1,638 and $1,647 in overnight trading, coinciding with stability in the currency markets. The U.S. Dollar Index held near unchanged at 81.907 while the euro oscillated between gains and losses near 1.2473 against the dollar.
Silver outperformed the gold price this morning, as it climbed as much as $0.27, or 0.9%, to $29.59 per ounce. In doing so, silver reached its best level since June 6th and extended its monthly and year-to-date advances to 5.8% and 6.8%, respectively. As for the price of gold, it is now up by 1.9% in August and by 5.2% in 2012.
Gold shares were steady alongside the gold price, as the Market Vectors Gold Miners ETF (GDX) held near the flatline at $46.40 per share. Yesterday the GDX rose to $47.23 – its best level since June 20th – before giving back approximately half of its gains. Nonetheless, the GDX remains higher by 8.5% this month, but down by 9.8% year-to-date.
Within the gold sector, two of the best performing stocks this morning were Eldorado Gold (EGO) and Yamana Gold (AUY). EGO advanced by 1.6% to $12.75 while AUY added 1.3% to $16.15 per share. On the downside, AngloGold Ashanti (AU) dipped by 0.3% to $34.26 and Gold Fields (GFI) fell by 0.9% to $13.40 per share.
Gold prices showed a muted reaction to the latest U.S. economic report, Existing Home Sales for July. While home sales increased by 2.3% last month to a 4.47 million annual rate, the figure came in below the 4.51 million consensus estimate among economists. The disappointing report served as a reminder that the U.S. housing market continues to face significant headwinds, but stood in contrast to the recent stretch of better than expected economic data.
Looking ahead, this afternoon the Federal Reserve will release the minutes from last month’s FOMC meeting. With that, investors will get one more look into the stance of the U.S. central bank ahead of next week’s Jackson Hole Symposium and Chairman Bernanke’s much-anticipated speech on the U.S. economy and monetary policy.
Despite today’s worse than expected housing data, the large majority of recent economic data suggests that the U.S. economy is rebounding from the lull encountered during May and June of this year. Coupled with the strong performance of the financial markets in July and August, most market strategists and economists do not see the Fed launching a third round of quantitative easing (QE3) at its next meeting in September.
Commenting on the likelihood of further Fed easing and its implications for the gold price, ScotiaMocatta’s Simon Weeks wrote in his latest note to clients that “People seem to feel that (the prospect) of unlimited QE is stretching out ahead of them and if you think about it, there is … bad news out there, be it economic or geopolitical tensions but gold doesn’t feel like it’s leading from the front. It feels slightly sluggish for a market that is supposedly an alternative in the current environment so I’m a bit cautious about getting too bullish about it.”
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