Gold drifts higher on rate decisions
Prices settle higher after the European Central Bank and the Bank of England leave interest rates unchanged.
By Alix Steel, TheStreet
Updated at 3:29 p.m. ET
Gold (-GC) for December delivery settled up $11.60 at $1,653.20 an ounce at the Comex division of the New York Mercantile Exchange. Gold traded as high as $1,656.80 and as low as $1,633.20 an ounce, while the spot gold price was lower by $2.30, according to Kitco's gold index.
Silver (-SI) prices rose $1.65 to finish at $32.01 an ounce while the U.S. dollar index was down by 0.4% at $78.64.
Gold prices were struggling to find direction as the Bank of England and the European Central Bank both left interest rates unchanged Thursday.
The Bank of England will keep interest rates at 0.5% and will raise its asset purchase program by 75 billion pounds to 275 billion to stave off a possible recession in Britain, as the country grew only 0.6% in the second quarter.
The European Central Bank, which has raised interest rates twice this year to 1.5% to fight inflation, now at 3%, also left rates unchanged. The recent blowup of the sovereign debt crisis makes it hard for the ECB to constrict the money supply further. However, some experts are anticipating a possible rate cut, or at least hints of one, as this is Jean-Claude Trichet's last meeting as president.
"Gold's unusual behavior at present can be explained by events on the futures market," wrote Commerzbank in a morning note. As speculative futures traders sell their gold positions to raise cash, demand from physical buyers steps in. "This pattern is likely to mean the price of gold fluctuating for quite some time within a broad sideways range before a new upturn begins."
Briefing.com expects the private sector to have added 90,000 jobs in September after adding only 17,000 in August. A better reading could boost equities and help markets continue to rally, which might push gold higher as there is less need to sell. Of course, the opposite could be true as well: a positive jobs number could give investors less of a reason to own the haven asset.
A bad number, on the flip side, could either help gold shine as a haven or could prompt more forced liquidation.
Jeff Clark, Casey Research's Senior Precious Metals Analyst, says, "When the market falls I think that investors will seek out liquidity and they will use an easily tradable gold position to do that." But Casey argues that this volatile and confusing time for gold is really a tiny blip on its long-term trajectory. "Debt is still crushing most of the developed world . . . (and) real interest rates are still negative." The real interest rate is the interest rate minus inflation.
"Governments show little sign of training their ways from printing money to saving, investing and being more conservative," argues Casey. "When the currency is being treated like that . . . gold's long-term strength is really as a long-term currency."
Casey says that although gold fell 10% in September, it wasn't a complete freak-out by investors. "A freak-out would take gold to $800 (like) in 2008 (when) gold lost a third of its value." Casey thinks this price dip in gold is a good buying opportunity, but warns that investors shouldn't go all in just in case prices fall further.
The one wild card for gold is if the European Union can come up with a decisive plan to recapitalize European banks, so that even if Greece does default, the financial system will be able to survive. If that happens, then gold's role as a haven might dissipate. But although the sentiment is there among leaders, there has been little agreement on a plan of action.
Gold mining stocks were trading mostly higher Thursday as broader equities surged. Barrick Gold (ABX) was up 2.4% to $47.37, and Newmont Mining (NEM) was adding 0.5% at $63.35. AngloGold Ashanti (AU) was falling 1.3% to $41.20, while Goldcorp (GG) was gaining 2.9% to $46.93.
Koch brothers: Get rid of regulations so we can we rule the world! And Libertarians and Tea Partiers want to be just like these 2 crooks. What a wonderful world!
OCCUPY TOGETHER IS SPREADING ACROSS THE ENTIRE GLOBE! THE 1%'s HAVE FINALLY MET THEIR DOOM! JUSTICE IS BEING SERVED!
STAND UP - STAND TOGETHER - STAND FIRM - STAND IN SOLIDARITY - TAKE BACK AMERICA FROM THE FASCIST CORPORACRATS - JOIN US AND STAND WITH US TODAY - WE ARE THE 99%'s! GOD BLESS A FREE AND PROSPOROUS AMERICA FOR ALL!
Copyright © 2013 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] Equity indices settled on their lows following a steady, session-long slide. Similar to yesterday, small-caps paced the retreat as the Russell 2000 fell 1.6%, extending its December loss to 3.6%. The S&P 500 settled lower by 1.1%, widening its month-to-date decline to 1.3%.
There was no specific news catalyst behind today's slide, which had the markings of broad-based profit-taking. Seven of ten sectors settled with losses of 1.0% or more while only two groups ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
LATEST MARKET DISPATCHES
- No more Dispatches; here's where to find market news
The Market Dispatches column has been discontinued. Here's where to find the latest stock and business news on MSN Money, and the latest from market writer Charley Blaine.
- Dow falls 59 as late-day gloom kills a rally
- Stocks held back by fiscal-cliff worries
- Stocks suffer worst weekly loss in 5 months
- Dow off 121 as post-election swoon continues
- Dow slumps 313 after Obama's re-election
- Dow jumps 133 as Americans head to the polls
The offering could become the second-biggest this year if underwriters exercise an option to buy more shares.