GOLD PRICE NEWS – The gold price hovered near unchanged at $1,379 per ounce after dropping 1% yesterday amid strength in the U.S. dollar. The price of gold continues to consolidate below $1,400 per ounce. Rising Treasury yields have weighed on the gold price in recent days as, despite remaining at extremely low nominal levels, higher interest rates are presenting a minor headwind to precious metals. Silver gained $0.20 to $29.00 Thursday morning after sliding 1.4% yesterday.
Investments tied to the gold price have retreated in recent days, with the SPDR Gold Trust (GLD) falling 1.0% this week and the AMEX Gold Bugs Index (HUI) declining 4% off its high of last week. Notable decliners in the gold space yesterday included AngloGold Ashanti (AU), Yamana Gold (AUY), and Newmont Mining (NEM). Shares of AU, AUY, and NEM finished lower by 2.6%, 2.0%, and 1.9%, respectively.
Despite the recent weakness, gold mining companies have been one of the strongest sub-sectors of the market in 2010. Record gold prices have led to stronger earnings and cash is building on gold miners’ balance sheets. Agnico-Eagle Mines (AEM) is the latest gold producer to boost its dividend, raising the annual payout to shareholders from $0.16 to $0.64.
The yellow metal remains higher by 26.1% year-to-date and is on track for its tenth straight annual gain. Legendary investor Jim Rogers presented his latest gold price outlook in an interview with TheStreet.com . Rogers reiterated his forecast for a $2,000 gold price this decade, but refused to provide a more precise timeframe.
Rogers noted that if you adjust the gold price’s previous all-time high of $850 in 1980 for inflation, the price of gold “should be over $2,000 now.” He also discussed his bullish forecasts for other commodities, including cotton and zinc, and predicted that silver “can certainly go to $50 again and probably much, much higher over the next decade.” Rogers subsequently mentioned his bearish outlook for U.S. government bonds, based on the unprecedented level of money printing being undertaken by the Federal Reserve.
Echoing Rogers’ negative view on U.S. bonds was Peter Schiff, President and Chief Global Strategist of Euro Pacific Capital Management. On CNBC’s Fast Money, Schiff was also very critical of the Fed’s policies, pointing to the significant rise in U.S Treasury yields in recent weeks. “The bond vigilantes are coming out of a coma,” noted Schiff, who contended that rising interest rates are a sign that the Fed is nearly “out of ammo,” and that “you’re not going to get economic growth by printing money.”
Schiff, a long-time gold bull and U.S. dollar bear, reiterated his positive outlook for the yellow metal, but did not provide a specific gold price target at this time. He did, however, say that the recent rebound in the U.S. Dollar Index is unlikely to continue, as “all we’re going to keep doing is printing money.”