Gold Price Steady after ECB Meeting, Draghi’s Comments
By jturbin | November 9, 2012 2:45 AM EST
GOLD PRICE NEWS – Gold prices oscillated between gains and losses on Thursday as investors digested yesterday’s sell-off in the broader financial markets following Barack Obama’s victory in the U.S. presidential election. The spot price of gold held in a narrow range between $1,712 and $1,721 per ounce this morning while the U.S. Dollar Index inched up by 0.1% to 80.825.
The dollar was supported in part by weakness in the euro currency, which fell to a two-month low of 1.2717 against the greenback following the European Central Bank’s (ECB) monthly monetary policy meeting. There, the ECB kept its benchmark interest rate unchanged at 0.75% and noted that “The risks surrounding the economic outlook remain on the downside.”
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Silver, which lagged the gold price on Wednesday, fared better than the yellow metal this morning as it rose $0.11, or 0.4%, to $31.98 per ounce. Other widely-traded commodities advanced modestly as well, with copper futures rising by 0.3% to $3.45 per pound and crude oil adding 0.5% to $84.87 per barrel.
Gold stocks came under pressure on Thursday despite stability in the price of gold, as the Market Vectors Gold Miners ETF (GDX) fell $0.43, or 0.8%, to $50.64 per share. Notable gold stocks in the red this morning included AngloGold Ashanti (AU) and Gold Fields (GFI) – which slid by 5.0% to $33.21 and by 1.9% to $12.77 per share, respectively.
The gold price showed a muted response to comments from ECB President Mario Draghi at his post-meeting press conference. There, Draghi noted that the economic outlook for the euro zone has continued to worsen and that the ECB is “ready to undertake” Outright Monetary Transactions (OMT) – the bond purchase program announced in September whereby it would purchase sovereign debt of struggling nations such as Spain and Italy in exchange for more control over the countries’ fiscal decisions.
In the U.S., the price of gold remained in consolidation mode after weekly jobless claims came in at 355,000 – below the 365,000 consensus estimate among economists. While a considerable amount of recent economic data has been better than expected, the yellow metal remains in a favorable environment due in large part to the Federal Reserve’s commitment to easy monetary policies irrespective of improvements in the U.S. economy.
Commenting on the outlook for the gold price, VTB Capital analyst Andrey Kryuchenkov stated that “We will continue with support around $1,700 and $1,680, but before the end of the year gold should gradually rise, because we have liquidity (quantitative easing), and low yields.”
Jeffrey Wright, a managing director at Global Hunter Securities, also discussed his bullish stance on the price of gold in a recent note to clients. “At this stage an Obama win combined with a clearly Republican controlled House of Representatives will be supportive for gold in the short thru long term,” Wright stated. “Obama has shown no serious intent to reign in runaway spending and attempt to close the deficit. Our national debt has significantly weakened the U.S. dollar and this is the key to higher gold going forward.”