GOLD PRICE NEWS – The gold price slid back below $1,670 per ounce Thursday morning after U.S. weekly jobless claims came in modestly ahead of expectations. Silver retreated alongside the gold price, by $0.53, or 1.6%, to $32.08 per ounce. In the currency markets, the U.S. Dollar Index advanced 0.2% to 77.20, while the euro fell 0.4% to 1.3731 against the greenback.
On Wednesday the gold price advanced $15.91 to $1,678.16 per ounce amid U.S. dollar weakness and strength in commodities. The spot price of gold initially climbed to $1,693.40, but pared its gains in afternoon trading. The afternoon’s release of the latest Fed minutes did little to deter the gold price, which maintained its gains as trading progressed.
The gold price also received a boost on Wednesday from GFMS, the world’s leading metals consultancy firm. GFMS, now a unit of Thomson Reuters, predicted the price of gold will average $1,770 per ounce in the four quarter of 2011. Such a development would require the gold price to resume its climb back toward $1,900 per ounce – a level that it surpassed in early September on the way to its latest all-time record high.
Silver prices rallied in concert with gold, by $0.49, or 1.5%, to $32.61 per ounce. Gold and silver shares climbed as well yesterday, with the Philadelphia Gold & Silver Index (XAU) finishing higher by 0.9% at 195.23. Among gold producers, Eldorado Gold (EGO) rose 0.3% and IAMGOLD (IAG) added 0.8%. Coeur d’Alene Mines (CDE) and Hecla Mining (HL), two of the larger silver mining companies in the sector, jumped 2.3% and 2.4%, respectively.
The gold price held near $1,680 per ounce on Wednesday after the Fed minutes revealed rising concerns over the health of the U.S. economy. “Stresses in global financial markets, sluggish growth in households’ real incomes, and heightened uncertainty about economic prospects seemed to have contributed to lower consumer and business sentiment and to be weighing on economic growth. Recent indicators pointed to continuing weakness in overall labor market conditions, and the unemployment rate remained elevated,” according to the transcript of the most recent Federal Open Market Committee (FOMC) meeting.
The Fed also spent a considerable amount of time discussing European sovereign debt issues. Although the central bank noted that the impact of euro zone concerns on U.S. financial institutions had thus far been muted, the Fed issued a warning for their counterparts across the Atlantic. “Participants agreed that, if European policymakers did not respond effectively, European sovereign debt and banking problems could intensify, with potentially serious spillovers to the U.S. economy.”
As for U.S. monetary policy, the minutes disclosed that the majority of the FOMC felt that Operation Twist “could contribute importantly to better outcomes in terms of the Committee’s dual mandate of maximum employment and price stability.” While most FOMC members supported the “maturity extension program,” the minutes revealed that two Fed Governors favored “stronger policy action.” Although the Fed did not identify the two, their existence could raise the possibility of a third round of quantitative easing – which would likely be quite favorable for the price of gold.
Source; http://www.goldalert.com/2011/10/gold-price-slides-back-below-1670/
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