Gold Prices
SPDR GOLD TRUST ETF
NYSE: GLD
May 23 01:30 PM
no chart
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Last price134.71Prev Close131.94
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Change2.77% Change2.1%
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Open134.18Volume248,562,492
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Day Low133.36Day High134.71
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Bid134.70Ask134.69
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52 Wk Low131.0752 Wk High173.61
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Market Cap509,153ExchangeNYSE
Today
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Gold Prices: Begging for QE3
The Fed's Operation Twist announcement Wednesday slammed gold prices, and the yellow metal fell 2.5% Thursday.
Gold for August delivery ended last week down 3.8% to about $1,570 an ounce, well below its 2011 high of $1,920.30.
Before the two-day FOMC meeting, gold was up 4% year-to-date. Gold rose at the beginning of the week on hopes that the Fed would announce accommodative moves.
In the last round of easy-money moves back in January, gold rallied as high as 15% as investors flocked to the asset for protection. Since then, gold has dropped numerous times from a lack of additional news of more easing.
Gold was once again disappointed last week when the Fed said it would keep twisting, and the lack of a more aggressive maneuver failed to give a needed gold rally.
"To get gold really moving, you need a definite QE3," Sterling Smith, commodity analyst with Citi Institutional Client Group, told Kitco News. "Operation Twist is not nearly the food for a gold bull that outright QE is."
Gold Prices and Operation Twist
On Wednesday morning, the Fed announced the extension of its long-term government bond holdings by $267 billion to decrease borrowing costs while selling an equal figure of short-term securities to keep its $2.9 trillion balance sheet.
While scheduled to end this month, the Fed extended the Operation Twist program until the end of the year.
Operation Twist is derived from a Federal Reserve program that "twists" the yield curve or sells short-term securities from its holdings and buys longer-term ones in an effort to drive down longer-term yields.
Market watchers had been mixed about this happening.
Barclay's Capital saw Operation Twist as "the most likely outcome," saying it would provide additional time for the Fed to sift through and mull soft data that is "payback" from the additional warm winter hiring or a potentially lengthier prolonged slowdown, reported Kitco.
But since Operation Twist was considered the least the Fed could do, markets had priced it in already.
Jeffrey Wright, managing director and research analyst with Global Hunter Securities, said to Kitco he expected limited gains for gold on the heels of the "Twist," possibly to the $1,650 range, as the market has already been adding in the possibility for Fed action.
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Gold Prices: Central Banks See Shine in Yellow Metal
When Federal Reserve Chairman Ben Bernanke failed to hint at more monetary stimulus last week, gold prices took a small hit.
But the picture for gold investors just brightened again thanks to increased activity from central banks.
Central banks are buying the yellow metal in copious amounts, marking the first time since 1965 that bankers have been such steady buyers.
Central banks amplified their gold stores by 400 metric tons, the equivalent of almost 2,205 pounds, in the 12 months through March 31. That was an increase from 156 tons in the same period a year ago, according to data from the World Gold Council.
Barron's reported Saturday that the World Gold Council "is now confident that central banks will continue to buy gold and has added official sector purchases as a new element of gold demand," according to a report from London-based bullion dealer Sharps Pixley.
The fresh facts indicate that central bank purchasing will continue for the foreseeable future.
That is quite a turnaround from the heavy selling the banks made from 1966 through 2007. During that time central bankers engaged in substantial selling, with only short periods of meager buying.
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Gold News: Why the Yellow Metal is Glistening
Comex gold futures surged Friday and soared to a bright three-week high following a very dismal U.S. jobs report.
The rally in gold came after the Labor Department reported employers added just 69,000 jobs in May, well below the anticipated 150,000. The data also pushed the unemployment level up a tick to 8.2% from 8.1%, stoking worries that the U.S. economy is still ailing and a recovery is far from certain.
The lackluster jobs report ignited hopes that a fresh round of quantitative easing may be in the near future. Gold prices climbed on the prospect.
Market participants returned to gold pushing the front month contract up some $59, nearly 3%, in early afternoon trading to $1,619.10 a troy ounce.
Silver rose in concert, gaining 96 cents to $28.67.
Trading was heavy and volatile in precious metals Friday, as traders moved quickly to cover short positions.
To date in 2012, gold has been experiencing its worst showing since the 2008 financial crisis. But the catalysts may be aligning to turn the trend upward.
"It's very likely that the economic data today and what's come out of Europe has convinced the market that there will be further government monetary stimulus," Robert Lutts, chief investment officer of Cabot Money Management, told Reuters. "Larger institutions will commit money to gold in ways they never had before."
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Here’s the Deal with Gold Prices
Gold prices have slipped, and investors keep wondering how low they’ll go. Money Morning Chief Investment Strategist Keith Fitz-Gerald joined Fox Business’ “Varney & Co.” to discuss the factors keeping gold down. Fitz-Gerald said these two reasons are the main drivers behind lower gold prices. In this video he explains if those factors are long-term or not. He also discusses with host Stuart Varney how Europe may handle its debt crisis, how the strategies will further affect gold – and how the current market and economic statistics could influence election 2012.
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Gold Mining Stocks: Now is the Time to Buy
There are lots of reasons you should own some gold. Despite taking a recent breather, gold prices are still up by 139% in the last five years.
Even so, shares of gold mining stocks have suffered lately, hurt mainly by higher energy and exploration costs.
In fact, the stocks of the large gold miners have become nearly as undervalued as they were during the 2008 financial crisis.
The last time shares of these big gold producers were this cheap, they rallied by 283%.
At these levels, that means it's time to take a closer look at shares of big gold miners - while they are still a bargain.
Here's what you need to know...
The Gold Bull Market is Not Over
A number of factors point to higher prices for gold:
- Real interest rates remain in negative territory. Sitting in cash right now is a losing proposition.
- The austerity movement in Europe is being replaced with more fiscal easing. The European Central Bank may have to print trillions of euros of debt to keep the Eurozone intact.
- The odds of more fiscal stimulus in China and the U.S. have increased, as two of the world's largest economies struggle to gain traction.
- Despite healthy demand and rising prices, global production of the metal rose just 0.7% annually from 1999 through 2011.
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Gold Prices: Making Sense of the "Death Cross"
Gold prices have tumbled 16% since last summer and, more recently, suffered a "death cross" leading many investors to question whether or not gold's bubble has popped.
If you're not familiar with the term, a death cross is what it's called when the 50-day moving average of the price of a traded instrument - in this case gold - crosses the 200-day moving average from above.
I disagree.
I think that the 16% drop since last September is simply based on a corresponding decrease in speculative interest at a time when the dollar has become the best looking horse in the glue factory.
Traders are simply moving currencies as the euro comes apart.
This isn't hard to understand when you consider that the dollar and gold have an inverse relationship. If one rises, the other traditionally falls.
I don't expect that to last much longer.
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Europe Drives Gold Prices This Week, But Don't Lose Sight of Long-Term
Gold prices managed to eke out a slight gain Friday to move back above the $1,560 a troy ounce mark - but the precious metal has had a less-than-stellar run this week, on track for a 1.9% loss.
In London trading Friday, the spot gold price was up 0.4% at $1,563.71, bouncing from as low as $1,533.41 earlier this week.
The upward move in gold came as the euro rebounded some from two-year lows against the dollar. The euro inched up from early lows against the dollar Friday, although sentiment around the troubled currency remains guarded.
Gold's rise Friday also was attributed to bargain hunting, calmer markets and short covering ahead of the three-day holiday weekend.
This week continues gold's eleven-week downward trend as the state of Greece and the entire Eurozone region has kept world markets on edge and investors jittery.
Worries over Greece exiting the Eurozone prompted heavy selling in the currency this week as the ailing Mediterranean country, operating without a government, faces imminent default.
"Gold's direction seems to be driven more by the level of market risk aversion and the euro currently," BNP Paribas analyst Anne-Laure Tremblay told Reuters. "Market sentiment on gold is fragile at the moment. There have been tentative rebounds, but so far bullish momentum has yet to materialize."
As always, however, there's another side to this story.
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Good News for Gold Prices: Commodities are Wounded, But Far From Dead
Greece is frozen in a political stalemate. Youth unemployment is running at over 50%. And there has been a $1 billion run on Greek banks.
From near and afar, there appears to be no easy way out, especially now that the Eurozone is heading back into a recession.
It's times like these when investors pour into the U.S. dollar for its "perceived safety."
With commodities priced in U.S. dollars, this spike in the greenback has sent commodities-including gold prices-into a tailspin since early March.
That has many doubters asking: "Has the commodities super-cycle ended?"
It's a reasonable question considering the Continuous Commodity Index (CCI) is back down to levels it last saw in September 2010.
What's more, gold prices have backed off to near $1,500/oz., and oil prices have fallen from $110 to $90/barrel.
But as you'll see, the commodities coin does have another side.
The Other Side of the Commodities Story
In fact, a recent article by Frank Holmes, CEO and chief investment officer at U.S. Global Investors, pointed out how China and other emerging nations are in better fiscal shape than much of the West.
Even if China is slowing somewhat, it is still growing at an enviable 8% per year, with only 42% debt to GDP ratio. So rather than go for more outright stimulus, it's expected that China will target new loan growth and its M2-money supply growth to around 14%.
Meanwhile, India and Australia have just lowered interest rates while other central banks are basically refusing to raise rates.
It means the world will keep turning, people will keep consuming and annual demand of raw materials is likely to remain elevated.
As for gold prices, let's cut right to the chase.
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