Gold and silver shares were sharply higher in Tuesday afternoon trading amid a rally in precious metals and modest weakness in the U.S. dollar.

COMEX gold futures, per the April contract, advanced $32.60, or 1.9%, to $1,758.50 per ounce while silver futures jumped $1.21, or 3.7%, to $34.43 per ounce.

The U.S. Dollar Index slid as much as 0.4% to 78.797 this morning but pared its losses this afternoon.

The Philadelphia Gold & Silver Index (XAU) climbed 2.7% to 198.05, as precious metals stocks were the best performing sector of the U.S. equity markets on the first trading day of the week.  The gains came despite negative analyst commentary on two of the world’s largest gold mining companies.

This morning, TD Securities lowered its target price on Barrick Gold (ABX.TSX, NYSE: ABX) to C$67.00 from C$69.00 per share but reiterated its Buy rating.  “One of our primary concerns regarding Barrick’s production profile has been the relative lack of visibility into its growth prospects,” the firm wrote in its report.  “The company is targeting 9 Mozs by 2016; our forecast gets to 8.4-8.6 Mozs by 2015/2016. We estimate that Barrick will generate 2012 FCF of ~$1 billion based on the updated guidance, which compares with our previous forecast of ~$2.0 billion.

Yesterday, CIBC World Markets downgraded Agnico-Eagle Mines (AEM.TSX, NYSE: AEM) to Sector Underperformer from Sector Performer and cut its price target to C$43.00 from C$54.00 per share.  The downgrade followed disappointing earnings results and production guidance from Agnico-Eagle.  “Our target multiple on the forward curve remains at 0.75x NAV, approximately 10% below the larger producer average,” CIBC noted. “Setting the bar very low and stepping over it is unlikely to warrant an immediate sector valuation premium. We believe a positive re-rating will require at least three to four quarters of solid operating results or good news at Goldex.”

Notwithstanding the bearish commentary, ABX jumped $1.42, or 3.0%, to $48.45 per share and AEM added $1.09, or 3.1%, to $36.53 per share.  Among gold miners, other notable advancers included Goldcorp (GG) and Newmont Mining (NEM), which rose 3.0% and 3.5%, respectively.

As for silver shares, Coeur d’Alene Mines (CDE) tacked on 4.0% to $28.98 per share and Hecla Mining (HL) surged 9.2% to $5.48 per share.

Gold and silver futures finished modestly lower on Friday amid broad-based weakness in the metals complex.

COMEX gold futures, per the April contract, settled with a loss of $2.50, or 0.1%, at $1,725.90 per ounce.  For the week, however, the yellow metal eked out a $0.60 gain, thereby snapping a two-week losing skid.

Silver for March delivery on the COMEX finished down by $0.31, or 0.9%, at $33.19 per ounce.  In doing so, silver extended its weekly decline to 1.2% and posted its third consecutive weekl y decline.

Despite the recent sluggishness in precious metals, on a year-to-date basis gold and silver futures remain higher by 10.2% and 18.9%, respectively.

As for cyclical commodities, they were mixed in afternoon trading.  Copper futures fell 1.9% to $3.73 per pound while crude oil advanced 1.1% to $103.41 per barrel.

GOLD PRICE NEWS – The gold price bounced back from overnight losses in morning trading on Tuesday, rising $3.61 to $1,727.51 per ounce.  The spot price of gold fell to as low as $1,711 at approximately 8:12am ET, but jumped back toward $1,730 after U.S. retail sales missed expectations.  With a 0.4% increase, January retail sales came in below the 0.7% consensus estimate among economists.  Silver rebounded alongside the gold price, from $33.35 to $33.79 per ounce.

On Monday the gold price began the week with a scant rise of 0.2% on its way to $1,723.90 per ounce.  The price of gold fluctuated between gains and losses, and remained well within the $1,700-$1,750 range it has occupied for the past several weeks.  A rebound in the U.S. Dollar Index was unable to deter the gold price, as the greenback recouped its earlier losses against a composite of foreign currencies.

Commenting on the ability of the gold price to hold firm in the face of the dollar’s strength, RBC Capital Markets’ George Gero wrote in a note to clients that “Cautious buyers are testing the waters” in the gold market.

While the gold price inched higher yesterday, silver continued to outperform the yellow metal.  The price of silver climbed 0.7% to $33.74 per ounce.  In doing so, gold’s sister precious metal extended its year-to-date gain to 21.7%.  Over the same time period, the price of gold has climbed a respectable – but far less – 10.2%.

In contrast to the gold price, shares of most gold producers finished modestly lower on Monday.  The Market Vectors Gold Miners ETF (GDX) opened in positive territory but quickly headed south, closing with a loss of 0.3% at $54.30 per share.  Notable decliners included Harmony Gold (HMY), Kinross Gold (KGC), and Newmont Mining (NEM).  HMY fell by 0.8% to $12.80, KGC by 3.2% to $10.44, and NEM by 0.4% to $59.41 per share.

Analysts at Morgan Stanley also remained constructive on gold prices on Monday.  “The defensive nature of gold should continue to support investment demand as investors look for safe havens.  A continued low or negative real interest rate environment will also provide support.”

One factor that could work against the gold price in the near term, however, is rising bullish sentiment – according to a note by TD Securities.  Last Friday, the Commodities Futures Trading Commission (CFTC) released its weekly Commitment of Traders report.  Speculative net long positions in gold futures increased by 4.0% in the week ended February 7, and by 44.0% on a year-to-date basis.

TD Securities’ Global Precious Metals team wrote in a note to clients that the rise is “too much too soon arguably.”  The firm contended that from a contrarian perspective, the increasingly positive sentiment could provide a headwind for the gold price in the weeks ahead.

GOLD PRICE NEWS – The gold price plunged Friday as global stock and commodity markets fell amid fresh worries over whether Greek politicians will pass the austerity measures necessary for the financially-strapped nation to receive its next installment of bailout funds.  Gold prices fell $17.30 to $1,711 per ounce while S&P 500 stock futures fell 11.60 to 1336.70.  WTI crude oil declined 1.7% to $99.33 per barrel and the cyclically-sensitive copper price sank over 2% to $3.89 per pound.

Just yesterday, gold prices eclipsed the $1,750 per ounce level, before relinquishing all of its gains as the day concluded.  The downside reversal in the gold price coincided with a rebound in the U.S. dollar, which pared its losses against a basket of the world’s most liquid currencies.  The SPDR Gold Trust (GLD), which had risen by as much as 1.1% to $170.37, settled lower by 0.3% at $168.02 per share.  Shares of GLD traded at 166.01 early Friday morning.

Silver followed a similar path to that of the gold price on Thursday, surrendering all of its gain on Thursday.  This morning, Gold’s sister precious metal fell 1.6% to $33.38 per ounce.  The iShares Trust (SLV), the largest silver ETF, changed hands at $32.41 per share.

The decline in the gold price pressured gold shares, which gave up all of their gains yesterday.  The Market Vectors Gold Miners ETF (GDX) turned a 1.6% gain into a 0.5% loss at $55.25 per share by the end of the day.  Among the large-cap gold miners, notable decliners included Eldorado Gold (EGO), Goldcorp (GG), and Yamana Gold (AUY).  EGO fell by 1.3% to $13.88, GG by 1.0% to $46.68, and AUY by 1.0% to $16.46 per share.  Gold mining stocks traded lower across the board Friday morning.

Over the past two weeks, the gold price has largely oscillated in a trading range between $1,720 and $1,760 per ounce.  Prior to that, the price of gold rallied 10.6% to begin the year.  The yellow metal’s ascent has come on the back of central bankers’ renewed commitments to accommodative monetary policies.  In recent weeks the Federal Reserve, European Central Bank, and Bank of England has each stressed the need for record low interest rates and warned of downside risks for their respective economies.

Looking ahead, many analysts expect the action of central bankers to continue to fuel gains in the price of gold.  In its latest edition of its Metal Matters Monthly publication, the precious metals research team at ScotiaMocatta discussed its outlook for higher gold prices.

“The reasons for being bullish have changed over the years, with some of the early ones, like producer dehedging, having largely run their course now,” the firm noted. “But, there seems no shortage of new reasons to be bullish for the metal. At present the concerns over EU debt and the fragility of the European monetary system seem to be taking centre stage and although there seems no end in sight for this problem, it looks likely that concerns about the US deficit and its massive debt levels could be waiting in the wings.”

ScotiaMocatta went on to say that “It seems highly likely that US budget and debt issues will become key topics in the US election and like the debt-ceiling standoff last July, may well fuel safe-haven buying. In addition, the fact Japan experienced a budget deficit last year, for the first time since the 1980’s may well mean that Japan’s public debt becomes an issue too.”

In summary, the firm asserted that “The combination of high levels of debt, a monetary system in the developed world that is creaking at the seams and falling confidence in governments’ handling of the crisis, are all likely reasons why investors, central banks and sovereign wealth funds, may be keen to hold more Gold as they diversify away from the dollar, the euro and other investments backed by fiat currencies.”

GOLD PRICE NEWS – The gold price declined Monday, sinking $11.00 to $1,714.80 per ounce.  Gold prices fell as investors and traders priced a lower probability of a fresh round of quantitative easing (QE) into asset markets.  Today’s weakness follows last Friday’s $33.99, or 1.9%, drop – its worst showing in over a month.  The better than expected U.S. jobs report appeared to dim the prospects for a third round of QE from the Federal Reserve.  The gold price surrendered its entire weekly gain and snapped a four-week winning streak.

Silver retreated alongside the gold price, falling 1.5% to $33.18 per ounce.  Gold’s sister precious metal fell 2.2% on Friday.  In doing so, silver also turned lower for the week, off 1.1%, and ended its stretch of four consecutive weekly advances.  Despite today’s declines, the price of gold and silver have advanced 8.9% and 19.5%, respectively, thus far in 2012.

Weakness in the gold price pressured gold shares, as the Market Vectors Gold Miners ETF (GDX) slid to $55.90 per share.  With the 1.8% drop in the benchmark gold ETF on Friday, the GDX finished the week lower by 1.2%.  Notable decliners in the gold sector on Monday included Newmont Mining (NEM) Goldcorp (GG), and Yamana Gold (AUY).

The gold price had moved higher for several days heading into Friday, but turned sharply lower after the January non-farm payrolls data report showed an increase of 243,000 jobs – far above the 140,000 consensus estimate among economists.  The November and December figures were also revised higher, by 57,000 and 3,000, respectively.  Furthermore, the unemployment rate dropped to 8.3%, its best reading since February 2009.

Commenting on the jobs data and the gold price, Saxo Bank’s Ole Hansen stated that “I think people are asking some questions now with regards to the Fed’s view about low interest rates into 2014.  If job creation carries on at this pace, that could be revised, thereby removing some of the support for gold.”

Camilla Sutton, chief currency strategist at Scotia Capital, offered a similar assessment in a note to clients.  “Today’s release is a very positive report and will soothe some of the deeper concerns at the Fed.  I think increasingly (QE3) is being pushed to the background.”

Alternatively, Miller Tabak’s chief economic strategist, Andrew Wilkinson, offered a more cautious view on the impact of the employment report.  “No doubt this is an extremely strong report and nobody will dislike it. The back revisions indicate the economy was stronger than expected. Overall a healthy report. Having said that, this should not change the Fed’s view as it is one month’s report. Certainly the Fed will welcome it but they remain worried about other areas of the economy, namely housing. This should not change its view on the economy.”

As for the coming week, the Federal Reserve will have far fewer reports to comb through as the U.S. economic calendar is particularly light.  The only notable data consists of reports on Consumer Credit on Tuesday, weekly jobless claims on Thursday, and University of Michigan Consumer Sentiment on Friday.  As such, the European sovereign debt crisis and other global macroeconomic developments are likely to have a greater impact on the direction of the gold price in the days ahead.

Gold and silver futures continued their march higher on Thursday amid broad-based gains in the precious metals space.

COMEX gold for April delivery settled with a gain of $9.80, or 0.6%, at $1,759.30 per ounce, while silver advanced $0.37, or 1.1%, to $34.16 per ounce.  In doing so, both gold and silver reached their best levels since mid-November and extended their year-to-date gains to 12.3% and 22.3%, respectively.

Platinum futures rose $6.70, or 0.4%, to $1,629.90 per ounce, while palladium jumped $10.95, or 1.6%, to $707.65 per ounce.

The rally in precious metals came despite stability in the U.S. dollar, which was higher by 0.1% against a composite of the world’s leading fiat currencies in afternoon trading.

Gold futures finished in positive territory on Tuesday, but finished well off their highs as the U.S. dollar rebounded against a basket of foreign currencies.

COMEX gold for April delivery climbed to an intra-day high of $1,750.60 per ounce this morning, but later tumbled to as low as $1,727 as the U.S. Dollar Index rose 0.5% to 79.49. The yellow metal quickly recovered, however, to settle higher by $6.00, or 0.4%, at $1,740.40 per ounce.

In doing so, gold futures posted an 11.1% gain in January, their best month since a 12.3% climb in August of last year. Furthermore, the rise marked the yellow metal’s second best month since surging 12.8% in November 2009.

Silver futures retreated $0.27, or 0.8%, to $33.26 per ounce on Tuesday.  Gold’s sister precious metal had risen to $34.13 this morning, but relinquished its gains as the dollar strengthened.  Despite the sell-off, however, silver futures fared even better than gold in January with a 19.1% gain.  With the advance, silver posted its best month since soaring 26.4% in April 2011 on its way to a 30-year high of $49.82 per ounce.

Other metals closed lower on Tuesday as well, but still finished with respectable gains in January.  Platinum slid $28.20, or 1.7%, to $1,588.10 per ounce but climbed 13.0% this month.

As for palladium, it dipped $2.15, or 0.3%, to $686.35 per ounce, thereby cutting its monthly gain to 4.6%.

Among cyclical commodities, copper dropped $0.04, or 1.0%, to $3.79 per pound, which reduced its advance in January to 10%.  Crude oil was a laggard among commodities, as it posted a 0.4% decline this month, settling at $98.48 per barrel.

Gold’s strong performance in January has illustrated that the yellow metal has “come roaring back from its latest temporary correction, sending the bears into full withdrawal,” according to Robert Lenzer.

The former National Editor and Senior Editor at Forbes Magazine, Lezner discussed the catalysts for gold’s rebound in a recent article on Forbes.com.

“Gold, you see, is not a commodity like oil and copper and wheat,” Lezner wrote. “It is rather an alternative currency– one that  finds buyers when paper currencies like the Euro are being hugely increased in supply by the ECB to forestall a sovereign cum bank crisis in Europe.”

Lenzer later stated that “As the supply of gold cannot keep up with paper money (supply increases very little despite exploration),  and it can be bought without loss of any real interest income, it seems clear that the gold bull market is alive and well.”

“Central banks obviously are of  the mind that gold’s rise will make up for the decline in paper money and the lack of income on central bank liquid investments,” he added.  ”The truth is that the drop to $1525 in December triggered the renewed buying by the Chinese, who are the new incremental buyers in the world. The Chinese prefer to buy on weakness and not compete with the central banks of Russia, Korea, Thailand,Singapore and are buying to hold.”

Gold futures continued to move higher on Friday, fueled by broad-based strength in precious metals and weakness in the U.S. dollar.

COMEX gold for February delivery settled higher by $5.50, or 0.3%, at $1,732.20 per ounce.  With its advance, the yellow metal extended its weekly and year-to-date gains to 4.1% and 10.6%, respectively.  Furthermore, gold stretched its weekly win streak to four – which had not occurred since last August.

Silver futures posted a modest gain as well on Friday, rising $0.05, or 0.1%, to $33.79 per ounce.  For the week, gold’s sister precious metal surged 6.7%, and is now higher by an even larger 21.9% in 2012.  Silver also posted its fourth consecutive weekly advance, which previously occurred in April 2010.

The U.S. dollar came under further pressure on Friday as the euro climbed amid dissipating sovereign debt concerns in Europe.  The Federal Reserve’s decision this week to extend its zero interest rate policy through 2014 was another key catalyst for the greenback’s slide.  With its decline to as low as 79.12 this afternoon, the U.S. Dollar Index reached its lowest level since December 12, 2011.

GOLD PRICE NEWS – The gold price climbed $12.08, or 0.7%, to $1,723.63 per ounce Thursday morning as the yellow metal built on yesterday’s Fed-induced rally.  Silver added to its gains alongside the gold price, by $0.27, or 0.8%, to $33.61 per ounce.  Equity markets throughout Asia and Europe were largely higher, while U.S. markets looked to open in the black as well.

Yesterday, the Federal Reserve lit a fire under the price of gold, as the yellow metal jumped $44.72, or 2.7%, to $1,711.55 per ounce.  The surge in the gold price was accompanied by U.S. dollar weakness and a broad-based rally on Wall Street.  With its advance, the gold price extended its year-to-date gain to 9.5% and reached its highest level since December 9, 2011.

While the gold price also posted its best day since October 25, 2011, silver fared even better.  Gold’s sister precious metal climbed $1.28, or 4.0%, to $33.34 per ounce.  Other precious metals headed north as well, with platinum and palladium futures each rising 2.0% to $1,583.20 and $694.00 per ounce, respectively.  Among cyclical commodities, copper futures increased by a more modest 0.9% to $3.84 per pound, while crude oil added 0.5% to $99.40 per barrel.

The gold price rally propelled gold shares substantially higher on Wednesday, as the group was the best performing sector in the equity markets.  The Market Vectors Gold Miners ETF (GDX) rebounded from an intra-day low of $51.58 per share to finish higher by 6.7% at $55.23.  The gain far outweighed that of the broader markets, as the S&P 500 Index rose 0.9% to 1,326.06.  Among large-cap gold producers, two of the top performers were Agnico-Eagle Mines (AEM) and Yamana Gold (AUY).  AEM soared by 9.0% to $37.58 per share and AUY by 9.8% to $16.92 per share.

The primary catalyst for yesterday’s gold price strength was the particularly dovish tone emanating from the Federal Open Market Committee (FOMC) meeting.  There, the Federal Reserve chose to extend the timeframe for its zero-interest rate policy to late-2014 from mid-2013.  Additionally, it introduced new language in the FOMC statement by saying that it intends to maintain a “highly accommodative” monetary policy stance for the foreseeable future.

Along with the statement, for the first time the Ben Bernanke-led Federal Reserve released a summary of economic projections from its individual members.  In particular, the Fed provided a chart showing the time at which the central bankers feel it will be appropriate to conclude its accommodative monetary policy stance.  Eleven of 17 members identified this time as 2014 or later, with four choosing 2015 and two choosing 2016.

Commenting on the Fed’s actions, Credit Suisse strategist Carl Lantz characterized the central bank as even more dovish than meets the eye.  In a note to clients, Lantz wrote that “The fact that the FOMC was willing to provide late 2014 as the earliest likely date for the first rate hike suggests that the actual expectation is significantly beyond late 2014…We suggest that by announcing that the first hike is unlikely to occur until ‘at least’ late 2014, the FOMC is actually providing the bottom of a confidence band around the committee’s intended estimate for the first hike…it would appear that the ‘core’ of the committee and a strong plurality of voters are in the 2015 or 2016 camps.”

With the Fed expected to keep the monetary spigots wide open for the next several years, real interest rates are likely to remain in negative territory for the better part of the decade.  Furthermore, judging by the ascent in the price of gold on Wednesday, it appears that investors may agree with Lantz that rates are unlikely to rise until 2015 or 2016.