Gold Prices “Well Supported,” Await Employment Data

GOLD PRICE NEWS – The gold price held in a relatively tight range on Tuesday, between $1,775 and $1,785 per ounce, amid a quiet open to financial markets.  While the price of gold climbed to a ten-month high of $1,794.32 yesterday, it later pared its gains as the yellow metal continued to consolidate below the $1,800 level.   Today’s stability in gold prices coincided with slight weakness in the U.S. dollar, which dipped 0.2% against a composite of the world’s most-traded currencies.

Silver lagged the gold price this morning, as it fell $0.09, or 0.3%, to $34.69 per ounce.  On Monday the price of silver rose to a seven-month high of $35.44 per ounce before also surrendering the majority of its gain.  Despite today’s mixed action in precious metals, the prices of gold and silver remain higher on a year-to-date basis by 25.1% and 13.7%, respectively.

Gold shares turned modestly lower on Tuesday, with the Market Vectors Gold Miners ETF (GDX) falling $0.17, or 0.3%, to $53.75 per share.  Since surging to its own seven-month high of $55.25 on September 21st, the GDX has also been in consolidation mode as investors await the next set of catalysts for the gold sector.  This morning, notable gold stocks moving lower included AngloGold Ashanti (AU), Goldcorp (GG), and Yamana Gold (AUY).  AU dropped by 1.7% to $34.67, GG by 1.0% to $45.76, and AUY by 0.7% to $19.07 per share.

Yesterday the gold price rallied after Chicago Federal Reserve President Charles Evans emphasized the importance of the Fed’s open-ended third round of quantitative easing (QE3) until the U.S. unemployment rate declines to 7%.  Evans added that “there is scope for doing more” in terms of accommodative monetary policies, which helped propel precious metals the broader markets higher.

However, the price of gold and other U.S.-dollar denominated assets gave back a portion of their gains after Fed Chairman Ben Bernanke did not provide the markets with any signals of further easing in a speech on monetary policy.  Instead, Bernanke only defended the need for QE3 and addressed concerns regarding inflation and the Fed’s eventual exit strategy.

Looking ahead, analysts at RBC Capital Markets noted in a report to clients this morning that they expect the price of gold to remain range-bound until the next batch of U.S. employment data is released later this week.  The ADP Employment report will be announced Wednesday morning, followed by weekly jobless claims on Thursday and the all-important non-farm payrolls data on Friday.

RBC wrote that “Gold opening slightly weaker today at $1778.00 after closing in New York last night at $1781.00. We expect a $1770.00/$1790.00 range with a neutral bias. Gold looks set to consolidate over the next few days as this market awaits the data later in the week. The downside looks well supported by further safe haven buying but we would expect to see further profit taking capping attempts to rally.”