GOLD PRICE NEWS - The gold price is set to open the day near unchanged at $1,127 per ounce following yesterday’s $24 surge in the price of gold. On the heels of a relentlessly dovish Federal Reserve, the U.S. dollar declined and virtually all asset classes spiked higher. Weak dollar beneficiaries such as the gold price, gold stocks, oil price, and commodity producers turned in the strongest upside moves.

Gold stocks followed the gold price and the broader stock market higher as the Market Vectors Gold Miners ETF (GDX) closed up 2.6% at $46.12. Newmont Mining (NEM) and Goldcorp led the senior gold producers on the upside, finishing the day up 3.2% and 2.5%, respectively. In the mid-cap strata, emerging gold producers San Gold (SGR.TSXV) and Kirkland Lake Gold (KGI.TSX) posted gains of 7.5% and 5.4%, respectively, as investors sought out greater leverage to the price of gold.

Both the gold price and the gold stocks as a group have undergone a consolidation that has lasted 15 weeks - and counting. The GDX and gold price remain 19.9% and 8.8% below their December 2009 peaks. After plunging in January on a surge in bullish sentiment toward the U.S. dollar, the gold sector has regained its footing its recent weeks.

While the U.S. dollar has rallied over the course of the past four months, notably versus the euro and the British pound, it has weakened marginally over the past few weeks. As fears ebb over a collapse of the European Union and the euro, investors and traders have turned their attention back to America’s escalating deficits and debts. Greece and other nations have recently been attacked for their lack of fiscal austerity, however, both the U.S. Congress and - as evident yesterday - the U.S. central bank show very little movement away from a crisis-driven policy bent in spite of the fact that a crisis no longer exists.

The distortions, misallocation of capital, and loss of purchasing power of currency that are resulting from an on-going zero interest rate policy have driven investors to accumulate exposure to the gold price. As written in these pages many times, there is no tolerance for short-term sacrifice in order for a stronger tomorrow. Because of this fact, the U.S. dollar will continue to be degraded, its purchasing power will continue to dissipate, and confidence will decline - a macro-economic backdrop that remains supportive of both the gold price and the shares of gold stocks.