GOLD PRICE NEWS – The gold price turned lower on Monday as renewed sovereign debt concerns in Europe fueled safe-haven buying in the U.S. dollar. The spot price of gold fell $10.21, or 0.6%, to $1,763.70 per ounce this morning while the euro currency slipped 0.6% to 1.2904 against the dollar. The SPDR Gold Trust (GLD), a proxy for the gold price and the world’s largest gold ETF, slipped $0.92 to $171.04 per share.
Silver headed south alongside the price of gold, by $0.53, or 1.5%, to $34.05 per ounce. Other precious metals dropped as well, with platinum futures down by 0.7% at $1,626.10 per ounce and palladium off by 4.6% at $640.80 per ounce. Among cyclical commodities, copper futures retreated by 1.4% to $3.74 per pound and crude oil slid by 1.2% to $91.78 per barrel.
Weakness in the gold price and the broader equity markets put pressure on gold stocks, as the Market Vectors Gold Miners ETF (GDX) fell by $0.87, or 1.6%, to $53.94 per share. The S&P 500 Index posted a more modest decline of 0.3% at 1,455.86. Within the gold sector, notable shares in the red included Barrick Gold (ABX) and Newmont Mining (NEM) – which dropped by 1.7% to $42.15 and by 1.1% to $55.68 per share, respectively.
This morning’s moderate sell-off in the price of gold coincided with widespread weakness in financial markets amid further economic concerns in Germany and Spain. A survey of German business sentiment on Monday came in below expectations and declined for a fifth consecutive month. Over the weekend, a German politician in Chancellor Angela Merkel’s party made remarks that Spain must clarify if it needs financial assistance from the euro zone.
Looking ahead, ratings agency Moody’s is scheduled to publish the results of its credit review on Spain by the end of the month. Speculation has increased that Moody’s could downgrade Spanish debt to junk status, which may prompt the nation to seek a bailout from its European counterparts.
Neal Gilbert, currency strategist at GFT Forex, wrote in a note to clients that “Now that the game of guessing what central banks from around the world are going to be doing with their endless pools of liquidity, we are now back to guessing which country is going to be bailed out and when.”
As for the yellow metal, Deutsche Bank analyst Daniel Brebner commented that “Part of the issue is the lack of obvious catalysts in the near term to take gold prices higher. We have some continuing risk issues in Europe, U.S. manufacturing data continues to be for the most part disappointing, and Chinese growth continues to be a real risk as well in the near term. So there are a number of low growth concerns which could underpin the dollar, and keep gold somewhat moribund near term.”
However, Brebner added that “I do think we will likely see over the next quarter or so greater policy action both in Europe and China to support growth within those regions. The likelihood is for further accommodative monetary policy in both regions, and that could keep the gold price moving higher. We think we will see $2,000-plus gold prices in the first half of next year.”
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