GOLD PRICE NEWS – The gold price added to its recent losses on Wednesday as the U.S. dollar rebounded from an earlier sell-off. The spot price of gold rose to an overnight high of $1,708.24 per ounce, but later fell by as much as to $8.62, or 0.5%, to $1,688.86.
In doing so, the gold price reached its lowest level since November 6th and is now on pace for its third weekly decline in the past four. The SPDR Gold Trust (GLD), the world’s largest gold ETF and most liquid gold price proxy, retreated by $0.62 to $163.80 per share.
Weakness in gold prices helped pressure silver, as it dropped by as much as $0.28, or 0.9%, to $32.67 per ounce. The iShares Silver Trust (SLV), a proxy for the price of silver, fell by $0.33, or 1.0%, to $31.57 per share.
Gold stocks took it on the chin this morning despite only a modest drop in the price of gold. The Market Vectors Gold Miners ETF (GDX), comprised of many of the world’s largest gold producers, slid by $1.01, or 2.2%, to $45.63 per share. The sector fared considerably worse than the broader equity markets, as the S&P 500 Index dipped by 0.3% to 1,400.88.
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Among widely-traded gold stocks, notable decliners included GDX components Agnico-Eagle Mines (AEM), Eldorado Gold (EGO), and IAMGOLD (IAG). Shares of AEM fell by 2.5% to $52.71, EGO by 4.2% to $13.43, and IAG by 4.2% to $11.06.
Commenting on the recent weakness in gold prices, UBS analyst Edel Tully wrote in a note to clients that it “was not influenced by external forces and was likely a reflection of some participants’ growing frustration that gold has not managed to climb above $1,750/oz.”
However, Tully added that “Clients aren’t necessarily negative on the metal; rather participants are very frustrated and struggle to have a clear view…For sure, another bout of erratic price action will encourage more frustration.”
The UBS analyst went on to say that “As a result, trading the yellow metal and taking positions ahead of key policy decisions–with the Federal Open Market Committee meeting next week and the ongoing negotiation on the fiscal cliff–has become increasingly difficult. Given the lack of clarity on gold’s next direction, many have chosen to stay on the sidelines.”
On Wednesday, the gold price showed a muted reaction to the latest ADP Employment report on the U.S. labor market. ADP announced that private payrolls increased by only 118,000 in November – well below the 157,000 gain in October and also missing the 125,000 consensus estimate among economists.
While the ADP report generally has an influence on the price of gold and the broader markets, Friday’s non-farm payroll data will likely be a more significant catalyst for assets prices. Economists are expecting the U.S. Labor Department to that hirings rose by 87,000 last month, while the unemployment rate remained at 7.9%.