GOLD PRICE NEWS - The gold price fell $5.07 to $1,198.50 on Thursday as the price of gold was unable to build on yesterday’s $11 advance. The SPDR Gold Trust (GLD), which acts as a proxy for the gold price, finished the day lower by $0.52 at $117.21 per share. Following today’s 0.4% drop, the gold price is now lower by $12.85, or 1.1% on the week, and $45.15, or 3.6% for the month of July.
Weakness in the gold price pressured the shares of gold producers, as the Philadelphia Gold & Silver Index (XAU) - a basket of the largest gold mining and silver mining companies in the world - slid 1.3% to 170.88. The slide in the XAU extended the index’s monthly loss to 3.8%. Notable decliners in the precious metals sector included Goldcorp (GG), Kinross Gold (KGC), and Silver Standard Resources (SSRI). Shares of GG, KGC, and SSRI finished lower by 1.9%, 2.3%, and 2.4%, respectively. Bucking the trend were shares of Newmont Mining (NEM), Golden Star Resources (GSS), and Aurizon Mines (AZK) - which posted gains of 0.6%, 0.5%, and 0.2%, respectively.
With today’s sell-off, the gold price has now fallen $66.50, or 5.3%, from its all-time high of $1,265 reached on June 21. As the correction in the price of gold has continued, several key sentiment indicators on the yellow metal have declined substantially - from a contrarian perspective, suggesting the gold price may soon be ready to resume its ascent.
The latest reading of the Hulbert Gold Newsletter Sentiment Index (HGNSI), which measures recommended market exposure by gold timers, plunged 14.3 points to 9.2%. The last time the HGNSI was at such a low level was on August 28, 2009, one week before the gold price surpassed $1,000 for the first time in seven months and one month before the price of gold broke out to a new all-time high.
In his latest Gartman Letter, market pundit and investor Dennis Gartman, pointed out that the most recent Market Vane bullish consensus figure on the gold price stood at 63% - also the lowest since August of 2009. Gartman went on to refute the claims of investors and strategists who continue to claim that the gold price has reached “bubble” levels, noting that asset classes reach “bubble” territory when Market Vane bullish figures reach the 90-95% level. With regard to the gold price, the Market Vane bullish data has not surpassed the 89 level since March 2008 - when the price of gold first hit $1,000 per ounce.
Despite a gold price of nearly $1,200 per ounce, sentiment, as measured by both Market Vane and Hulbert, remains remarkably tepid. Market tops are generally made amid wide-eyed optimism and frenzied speculation - two characteristics that are non-existent in the gold sector.
