GOLD PRICE NEWS – The gold price tumbled on Thursday as investors took profits on its initial rally following the Federal Reserve’s decision to effectively launch a fourth round of quantitative easing (QE4). The spot price of gold climbed to as high as $1,724.97 per ounce yesterday, but later fell to an overnight low of $1,690.72. In late morning trading, gold prices pared their losses by rising back toward the $1,700 level.
Silver followed a similar path to that of the gold price, as it jumped to $33.87 per ounce on Wednesday but subsequently tumbled to as low as $32.35 this morning. With today’s weakness in precious metals, the prices of gold and silver turned lower on a weekly basis by 0.3% and 2.3%, respectively.
Gold stocks came under heavy selling pressure alongside the price of gold, as the Market Vectors Gold Miners ETF (GDX) slid by $1.11, or 2.3%, to $46.52 per share. The gold stocks sector also lagged the broader equity markets, as the S&P 500 Index hovered near unchanged at 1,27.88.
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Notable gold stocks in the red this morning included GDX components Agnico-Eagle Mines (AEM), AngloGold Ashanti (AU), and Goldcorp (GG). Shares of AEM dropped by 1.1% to $53.71, AU by 1.6% to $30.42, and GG by 2.8% to $37.18.
With regard to today’s gold price sell-off, analysts at UBS stated that “The temptation to lock-in profits as we near year-end was strong…But despite the decline … we don’t think the sentiment towards gold has actually turned negative.”
UBS went on to say that “There is hardly any follow-through selling interest in early European hours, and we would expect market participants to hesitate chasing the market lower after the Fed has essentially just doubled the pace of money-printing.”
HSBC analyst James Steel offered a similar take on the price of gold this morning. “We view the [Fed] announcement as bullish, but with market expectations already factored in for some easing, we don’t expect prices to react robustly near-term,” Steel noted.
Nonetheless, he asserted that “In the long run, the ongoing monetary expansion is supportive of gold, especially if it is a factor weighing on the U.S. dollar.”
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