Gold Price Steady, U.S. Economic Data Disappoints

GOLD PRICE NEWS – The gold price remained in consolidation mode near $1,725 per ounce for a fourth straight trading session on Wednesday as the U.S. dollar held near unchanged against a composite of foreign currencies.  The spot price of gold held in a narrow range between $1,721 and $1,732 this morning, while the U.S. Dollar Index stabilized near 81.075.  The stability in gold prices and the greenback came despite two worse than expected U.S. economic reports on retail sales and inflation.

Silver fared better than the price of gold, rising $0.13, or 0.4%, to $32.60 per ounce.  Other precious metals turned higher, with platinum futures advancing by 0.5% to $1,593.90 per ounce and palladium jumping by 1.8% to $647.85 per ounce.  Among cyclical commodities, copper futures inched up by 0.2% to $3.48 per pound and crude oil climbing 1.0% to $86.72 per barrel.

Gold stocks came under pressure despite the stability in the gold price, as the Market Vectors Gold Miners ETF (GDX) slid as much as $0.94, or 1.9%, to $48.54 per share.  In doing so, the GDX fell to its lowest level since September 6th and extended its month-to-date loss to 8.2%.  The sector – which substantially outperformed the price of gold in each of the past three months – has returned to lagging the yellow metal, which remains higher by 0.3% in November.

The worst performer in the gold stocks sector this morning was IAMGOLD (IMG.TSX, NYSE: IAG), which plunged by as much as $2.44, or 16.4%, to $12.42 after announcing very disappointing third quarter earnings results.  The Canadian-based gold miner reported earnings per share of $0.16, which came in well below the $0.25 median estimate among Wall Street analysts.  In addition, IAMGOLD lowered its 2013 production guidance by 13% to between 875,000 and 950,000 ounces.

Following the release of IAMGOLD’s results, Macquarie analyst Tony Lesiak downgraded shares of IMG.TSX to Neutral from Outperform and lowered his price target to C$17.50 from C$19.00.  In his note to clients, Lesiak wrote that “Investor sentiment, which has already been ruffled by the Cote Lake acquisition must now contend with the 3Q12 operating miss, lower 2013 production guidance, a slower ramp-up at Westwood, and the continued unknown future of the Sadiola sulphide expansion.”

(For more analyst commentary on IAMGOLD, as well as coverage and rankings of over 90 gold and silver stocks, visit GoldAlert Pro at http://pro.goldalert.com)

As for the gold price, it showed a muted response to the latest batch of U.S. economic data.  Retail sales for October dropped by 0.3%, missing the 0.2% decline economists were expecting.  The Producer Price Index, a closely-followed measure of inflation, rose last month by 2.3%, below the 2.6% consensus estimate among economists.  The two worse than expected reports helped reinforce the Federal Reserve’s stance that the U.S. economy has slowed noticeably in recent months and that inflationary expectations remain moderate.