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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%.
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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.
