GOLD PRICE NEWS – The price of gold tumbled on Tuesday amid rising speculation that U.S. politicians are close to an agreement to resolve the looming fiscal cliff. In afternoon trading, the spot gold price was lower by $28.38, or 1.7%, at $1,669.79 per ounce, its worst level since late August. The sell-off in the price of gold came despite modest weakness in the U.S. dollar, as the greenback dropped by 0.3% against a composite of foreign currencies.
Gold prices and the dollar, which both tend to serve as safe haven asset classes, declined amid a strong “risk-on” day on Wall Street. The S&P 500 Index climbed 14.67 points, or 1.0%, to 1,445.03 – its best level since October 19th.
Gold stocks did not participate in the broad-based rally, however, as the Market Vectors Gold Miners ETF (GDX) slid $1.07, or 2.3%, to $45.44 per share. Notable GDX components in the red included Barrick Gold (ABX) and Newmont Mining (NEM) – which fell by 2.2% to $33.73 and by 1.8% to $43.84 per share, respectively.
(Visit GoldAlert Pro at http://pro.goldalert.com for rankings, price targets, upgrades and downgrades on every gold and silver stock in the GDX)
The weakness in gold prices spread to other precious metals, as the spot price of silver retreated by $0.66, or 2.0%, to $31.60 per ounce. As for platinum and palladium futures, they dropped by 1.0% to $1,591.55 per ounce and by 1.7% to $687.65 per ounce.
Commenting on the sharp decline in the price of gold, Phillip Streible – a senior commodities broker at futures brokerage R.J. O’Brien – stated that “You are seeing more confidence in the stock market on hopes that they are getting very close to getting a (fiscal cliff) deal done, and that’s why some of these assets which are defensive in times of uncertainty are selling off.”
Steve Barrow, head of G10 research at Standard Bank, however wrote in a note to clients that “It is all very tight and it is still possible that [the fiscal cliff issue] runs into next year…But what does seem clear is that some sort of deal will be done and that’s clearly helping to support markets, although the optimism is quite guarded.”
As for the gold price specifically, VTB Capital analyst Andrey Kryuchenkov contended that “We expect subdued gold-trading action until the market is clear on the fiscal cliff negotiations. We see US lawmakers striking an uneasy late deal over spending reductions and tax hikes.”
Copyright Gold Alert All rights reserved.