Despite a weaker US dollar, gold prices continued to fall as President Obama announced proposals to limit consolidation in the bank industry, and put additional restrictions on trading activities. Some experts believe that unless gold prices settle above $1,100.00 per ounce, that a larger pullback in gold prices could occur. See the following article from The Street for more on this.
Gold prices fell below $1,100 despite a weaker U.S. dollar.
Gold for February delivery was sinking another $12.50 to $1,090.70 an ounce at the Comex division of the New York Mercantile Exchange. Prices have traded as high as $1,098.0 and as low as $1,081.90. The U.S. dollar index was also falling 0.27% to $78.20 as the euro rallied.
Gold typically trades in opposition to the U.S. dollar since dollar-based commodities become cheaper to buy in other currencies when the dollar falls. But gold is bucking that inverse correlation Friday as general risk aversion cripples the commodity. President Obama announced Thursday a proposal to limit consolidation in the bank industry as well as restrict reportedly risky trading activities. Gold settled down almost $10 to $1,103.20 an ounce on the news. Also weighing on gold prices is the worry that China will tighten credit ending the supply of free money which has helped stimulate the global economy.
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“The dollar and broad risk sentiment will continue to provide short-term direction [for gold],” says James Moore, analyst at thebulliondesk.com in his daily metals report. “A failure to hold the $1,074 low from December could see gold post a deeper correction back to $1,038-62 channel.” Many analysts believe gold needs to settle above $1,110 an ounce in order to avoid a larger pullback.
Silver prices were down 48 cents to $17.03 while copper was up 6 cents at $3.36. Platinum prices were also slipping dramatically down $37.10 to $1,555 and palladium was losing $20.30 to $433.65. The white metals are subject to more volatile swings due to a thinner investment market.
Mining stocks, a more leveraged way to invest in gold, were mixed along with broader equities. Large cap miners, Barrick Gold(ABX Quote) and Newmont Mining(NEM Quote) were rising slightly to $36.95 and $44.76, respectively. Kinross Gold(KGC Quote) was rising 0.79% at $17.98.
Shares of small-cap miner Golden Star(GSS Quote) were flat at $2.96 after the stock was upgraded to outperform from market perform at Raymond James.
Dahlman Rose & Co. reiterated its buy rating on Freeport McMoRan Copper & Gold(FCX Quote) after the company reported better than expected earnings. Shares were relatively unchanged at $76.44. Yamana Gold(AUY Quote) was rising 0.93% to $10.88.
Shares of the SPDR Gold Shares(GLD Quote) were slipping 0.43% to $106.84. The ETF has maintained consistent tonnage this week in the face of lackluster investment demand.
This article has been republished from The Street. You can also view this article at The Street, an investment news and analysis site.