Kamis, 03 Mei 2012
Gold Price Falls, ECB Mum on Further Stimulus
By jturbin
GOLD PRICE NEWS – The gold price tumbled $17.42, or 1.1%, to $1,636.89
per ounce on Thursday amid better than expected U.S. economic data and
the European Central Bank’s (ECB) monetary policy meeting. The price of
gold extended its decline after weekly U.S. jobless claims came in at
365,000 – below the 379,000 level economists were expecting. Silver
dropped alongside the gold price, by $0.37, or 1.2%, to $30.32 per
ounce. U.S. equity markets fell modestly as well, with the S&P 500
Index down by 0.3% at 1,398.08 in morning trading.
In Europe, ECB President Mario Draghi did not offer any indications that
further monetary stimulus is on the horizon. The most recent economic
indicators “are not enough to change our baseline scenario, which
foresees a gradual recovery in the course of the year,” Draghi stated at
his post-meeting press conference.
On Wednesday the gold price fell $7.52, or 0.5%, to $1,654.31 per ounce
as the U.S. dollar advanced and financial markets shifted into risk-off
mode. The modest decline in the price of gold came despite another
disappointing report on the U.S. labor market. The ADP Employment
report for April showed that the private sector added only 117,000 jobs
last month – which was far below the 170,000 median estimate among
economists.
Following the ADP announcement, the U.S. Dollar Index climbed 0.4% to
79.127 against a basket of foreign currencies. As the dollar rallied,
silver dropped in concert with the gold price, by $0.31, or 1.0%, to
$30.69 per ounce. Other precious metals retreated as well, with
platinum futures sliding $7.90, or 0.5%, to $1,564.40 per ounce and
palladium sinking $11.60, or 1.7%, to $669.45 per ounce.
Gold shares also headed south, as the sector was pressured by a
combination of gold price weakness and worse than expected earnings
results from the world’s largest gold mining company. The Market
Vectors Gold Miners ETF (GDX) closed down by 1.7% at a $45.66 – just
3.3% above the multi-year low of $44.18 per share that it reached last
week.
Barrick Gold (ABX), the largest gold producer in the sector, finished
with a loss of 2.7% at $39.36 per share after reporting earnings that
slightly missed analysts’ estimates. In addition, several analysts
cited higher than expected capital expenditures as a cause for concern.
On the positive side, however, Barrick raised its annual dividend by
33% to $0.80 per share.
In his summary of Barrick’s results, TD Securities analyst Greg Barnes
wrote in a report that “While the boost in the dividend could appease
some investors and does reflect management confidence in the company’s
outlook for growing cash flow, the ongoing cost challenges at Pascua
Lama (combined with a potential delay in project start-up) is likely to
reinforce concerns about the wisdom of proceeding with development on
large longer term development projects during a period of rampant cost
inflation.”
While the price of gold has generally responded favorably to worse than
expected U.S. economic data in recent years, yesterday the yellow metal
showed a muted – albeit mildly negative – reaction to the ADP data.
Commenting on the implications of the employment report, Paul Ashworth –
chief U.S. economist at Capital Economics – contended that Friday’s
non-farm payroll data could also come in below economists’ estimates.
“Obviously, the weak ADP reading means that there are now clear downside
risks to our estimate that the official nonfarm payroll employment
figures will show a 175,000 gain. Indeed, it is possible we could see a
repeat of March, when payrolls increased by only 120,000.”
http://www.ibtimes.com/ articles/336761/20120503/gold- price-falls-ecb-mum-on- further-stimulus.htm
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