GOLD PRICE NEWS – The gold price turned higher on Monday amid a modest rally in the commodities complex. This morning, the spot price of gold rose by as much as $13.86, or 0.8%, to $1,718.75 per ounce. In doing so, the gold price more than recouped its entire 0.5% loss from last week and moved into positive territory by 0.2% on a month-to-date basis.
Silver rallied in conjunction with the gold price, by $0.39, or 1.2%, to an intra-day high of $33.49 per ounce. Among other precious metals, platinum futures advanced by 1.2% to $1,625.60 per ounce while palladium tacked on 1.1% to $705.30 per ounce. As for cyclical commodities, crude oil futures rose by 0.6% to $86.46 per barrel while copper climbed by 1.3% to $3.71 per pound.
The gold stocks sector outperformed the price of gold on Monday, as the Market Vectors Gold Miners ETF (GDX) jumped by $0.74, or 1.6%, to $46.67 per share. Gold stocks also fared better than the broader equity markets, as the S&P 500 Index inched up by just 0.1% to 1,418.94.
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Notable gold stocks in the black this morning included GDX components AngloGold Ashanti (AU), Gold Fields (GFI), and Newmont Mining (NEM). Shares of AU advanced by 1.3% to $30.55, GFI by 1.9% to $11.54, and NEM by 1.3% to $45.01.
Looking ahead to this week, the most significant event likely to impact the price of gold and the broader financial markets is Wednesday’s Federal Open Market Committee (FOMC) meeting. There, Federal Reserve Chairman Ben Bernanke and his fellow central bankers are expected to decide on the future of their third round of quantitative easing (QE3) in light of the fact that Operation Twist is scheduled to end on December 31st.
Many economists and strategists expect the Fed to increase QE3, perhaps by $45 billion per month, as this was the size of Operation Twist. If that were to occur, it would bring the total amount of asset purchases under QE3 to $85 billion.
Commenting on the Fed meeting, UBS strategists Edel Tully wrote in a note to clients that “We expect the announcement of additional balance sheet expansion.” She added “This has not been priced in (by the markets), so any aggressive move by the Fed would prompt a sizeable response.”
Analysts at Barclays Capital projected a similar stance in a recent report, noting that “Despite the upbeat tone of the most recent data, our economists do not expect a less dovish stance at the FOMC’s December meeting due to the downside risk posed by the fiscal cliff…Continuity is the theme for US monetary policy.”
In addition to the Fed meeting, the U.S. economic calendar contains several reports likely to influence the gold price. While the schedule for the early part of this week is relatively light, Thursday’s docket includes data on Weekly Jobless Claims, Retail Sales, and the Producer Price Index (PPI). Along with the PPI, another key measure of inflation – the Consumer Price Index (CPI) – will be announced on Friday.
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