Gold Price Firm, “Incentives to Buy are Still There”
GOLD PRICE NEWS – The gold price rebounded on Tuesday following declines in six of the past seven trading sessions as the U.S. dollar turned lower in this morning. The spot price of gold rose as much as $11.43, or 0.7%, to $1,748.73 per ounce while the U.S. Dollar Index (DXY) fell 0.4% to 79.414. The SPDR Gold Trust (GLD), a proxy for gold prices and the world’s largest gold ETF, advanced $0.75 to $169.10 per share.
Along with the price of gold, silver climbed $0.31, or 0.9%, to $33.04 per ounce. Gold’s sister precious metal had also fallen for six of the past seven trading days amid broad-based weakness in the commodities markets. Despite today’s strength, the prices of gold and silver remained lower this month by 1.4% and 4.3%, respectively.
Gold shares rallied in concert with the gold price this morning, as the Market Vectors Gold Miners ETF (GDX) jumping $0.73, or 1.4%, to $52.37 per share. Thus far in October, the GDX has trailed the price of gold by only a small margin, as it is now lower by 2.5%.
Notable gold stocks in the black on Tuesday included GDX components Eldorado Gold (EGO), Gold Fields (GFI), and Newmont Mining (NEM). Shares of EGO rose by 2.3% to $14.51, GFI by 1.7% to $12.32, and NEM by 2.1% to $55.76.
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Gold prices showed a modestly favorable response to the latest reading on U.S. inflation, as the Consumer Price Index (CPI) for September increased 2.0%. The report was slightly above the 1.9% consensus estimate among economists. However, excluding food and energy prices, to which the Federal Reserve gives more credence, the CPI met economists’ expectations of 2.0% growth.
Although the gold price has retreated in recent weeks, it has advanced for four consecutive months and remains higher by 11.8% on a year-to-date basis. Credit Suisse analyst Tobias Merath wrote in a recent note to clients that “Particularly for investors and central banks, the incentives to buy gold are still there. Quantitative easing, low interest rates, counterparty risk concerns, all these factors are in place, and investment interest is definitely there.”
However, Merath added that “The way we interpret the current episode is that we saw a meaningful test of $1,800, we didn’t manage to break that and now we have retreated a little bit. People have taken a bit of profit, but we think this is a temporary story.”
2012-10-16 08:24:52
Source: http://www.goldalert.com/2012/10/gold-price-firm-incentives-to-buy-are-still-there/
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