Gold Price Holds Firm as Jobless Claims Fall

Gold prices remain calm after a report released today announced US jobless claims fell last week, but was slightly less than market expectations. While gold remained stable on the news, other commodities like oil and copper fell.

Thursday, February 2, 2012, 9:32am EST
GoldAlert Staff
Gold Alert

GOLD PRICE NEWS – The gold price hovered near unchanged Thursday at $1,747 per ounce amid relative calm in financial markets. Strong auctions for French and Spanish sovereign debt helped keep a bid under European equity markets. U.S. jobless claims fell last week to 367,000, slightly less than market expectations. While the price of gold stabilized, the stronger jobs data helped boost the U.S. dollar, which pressured other commodity prices. Oil and copper prices fell roughly 1% each to $96.95 per barrel and $3.80 per pound, respectively.

On Wednesday, the gold price rose $5.40, or 0.3%, to $1,744.69 per ounce amid the U.S. dollar declined against a basket of the world’s leading currencies. The price of gold reached an intra-day high of $1,754.10 earlier in the day, but relinquished over half its gains as trading progressed. Coming off of its best month since August and its best January in 32 years, the gold price is now higher by 11.6% on a year-to-date basis.

Gold prices were also supported by reports that holdings of metal exchange-traded funds (ETFs) increased by more than 650,000 in January. This marked the first month of net inflows since October and signaled that buying interested in the yellow metal is on the rise. The SPDR Gold Trust (GLD), the world’s largest gold ETF and a proxy for the price of gold, inched higher by $0.25, or 0.2%, to $169.56 per share on Wednesday.

Silver continued its recent outperformance of the gold price yesterday, as it climbed $0.56, or 1.7%, to $33.74 per ounce. In doing so, gold’s sister precious metal settled at its highest level since November 15, 2011. Furthermore, silver extended its gain this year to 21.7% – making it one of the top performing asset classes thus far in 2012.

While the gold price posted a modest gain, gold shares stabilized for a second consecutive day. The Market Vectors Gold Miners ETF (GDX) closed higher by $0.10 at $56.56 per share and is now up 10.0% this year. Notable advancers included Gold Fields (GFI) and Harmony Gold (HMY), which rose 1.0% and 1.7%, respectively. Among decliners, Goldcorp (GG) slid 1.6% and Newmont Mining (NEM) fell 0.6%.

The broader financial markets moved higher on Wednesday as well, with the S&P 500 Index rising 0.9% to 1,324.09. Stocks were boosted by weakness in the U.S. Dollar Index (DXY), which slid 0.5% to 78.894. The euro currency, which comprises 57.6% of the DXY, jumped 0.6% to 1.3165 against the greenback. Sovereign debt concerns in Europe continued to subside as the German Purchasing Managers Index increased from 48.4 in December to 51.0 in January, ahead of expectations.

Commenting on the gold price, Saxo Bank senior manager Ole Hansen wrote in a report to clients that “Buyers have returned to the euro, which is helping the situation in gold. It had a bit of lacklustre profit-taking yesterday but didn’t break anything important on the downside, which helped confirm that being long is back in vogue.”

Hansen went on to say that “The last two weeks have done a heck of a lot to confidence, and we’ve seen that attempted corrections (in the price of gold) have been short-lived, so the mood has definitely changed, but overall, we are overbought quite significantly … so there will be some kind of consolidation.”

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