GOLD PRICE NEWS – The gold price fell $8.35, or 0.5%, to $1,751.47 per ounce Friday morning as the January U.S. jobs report came in well above expectations. The price of gold turned lower after non-farm payrolls came in at 243,000 – handily beating the 140,000 consensus estimate among economists. The unemployment rate dropped to 8.3%, below the expected 8.5% level and the best reading since February 2009.
The gold price was also pressured by the U.S. dollar, which rebound from earlier losses against a basket of foreign currencies. European markets extended their gains following the report, while S&P 500 futures climbed 0.9% to fresh six-month highs of 1,334.75.
On Thursday the gold price climbed $15.13, or 0.9%, to an 11-week high of $1,759.82 per ounce. In doing so, the price of gold extended its weekly and year-to-date gains to 1.2% and 12.5%, respectively. The SPDR Gold Trust (GLD), a proxy for the gold price and the sector’s largest ETF, finished up $1.49 at $171.05 per share.
Silver continued to post even larger gains than the gold price, as it jumped $0.59, or 1.8%, to $34.33 per ounce. Gold’s sister precious metal is now higher by 1.2% this week, and by an impressive 23.9% in 2012. The iShares Silver Trust (SLV), the world’s largest silver ETF, rose 1.8% to $33.36 per share.
Precious metals equities rallied alongside the price of gold and silver, as the Philadelphia Gold & Silver Index added 1.0% to 202.74. The XAU – comprised of many of the sector’s largest mining companies – is extended its year-to-date return to 12.2%. On Thursday, notable advancers among gold producers included Goldcorp (GG) and Yamana Gold (AUY), which climbed 2.2% and 2.4%, respectively. As for silver stocks, Pan American Silver (PAAS) rose 1.3% and Silver Standard Resources (SSRI) jumped 1.6%.
Gold and silver shares also continued to outperform the broader equity markets. The S&P 500 Index inched higher by 0.1% to 1,325.54 on Thursday, bringing its year-to-date gain to a very respectable – but much smaller – 5.3%. The markets’ ascent has coincided with a significant decline in investor risk aversion, evidenced by the CBOE Volatility Index (VIX) closing yesterday at 17.98 – its lowest level since July 22, 2011.
The gold price extended its gains yesterday after Federal Reserve Chairman Ben Bernanke discussed his economic outlook in testimony to the U.S. Congress. There, Bernanke largely reiterated the Fed’s dovish monetary policy stance – as outlined during last month’s FOMC meeting. The Fed Chairman also noted that the U.S. economic recovery has been “frustratingly slow” and remains quite vulnerable to the European sovereign debt crisis.
Dennis Gartman, publisher of the widely-read Gartman Letter and a long-time commodities investor, reiterated his bullish call on the gold price and equities yesterday. “Gold is rising in terms of all currencies these days,” he noted. “Gold is a protest against monetary expansion, and hence we might well consider owning equities AND gold, for both have been, are, and will be the beneficiaries of these expansionist policies.”
Anne-Laure Tremblay, an analyst at BNP Paribas, also presented a bullish case for the price of gold in a recent note to clients. “Gold’s fundamentals are strong and the recent rebound in risk appetite has encouraged investors to come back to the market or add to their existing positions,” said stated. “We expect gold to reach new highs in 2012, although episodes of extreme risk aversion may trigger corrections along the way.”