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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