Gold Price Stabilizes After Weak Jobs Data

GOLD PRICE NEWS – The gold price dropped Thursday morning, but moved off its morning lows after weaker than expected initial jobless claims data.  Theprice of gold, which traded as low as $1,416.75 per ounce, moved back up to $1,422 per ounce.  First-time jobless claims rose 26,000 to 397,000 against expectations of 376,000, raising concerns that the recent uptick in the employment data will prove to be temporary.  Also helping to stabilize the gold price was this morning’s news that the U.S. trade deficit widened to its highest level in seven months.

Silver prices traded off sharply, sinking 2.5% to $35.20 per ounce as selling pressure in the broader stock and commodity complex weighed on gold’s more cyclical sister precious metal.  The gold price continues to consolidate below its all-time record high of $1,445 per ounce.  Despite weakness in the price of silver today, it has greatly outperformed the gold price, rising 13.8% in 2011.  With Thursday’s modest decline in the gold price, the yellow metal moved back to unchanged this calendar year.

Gold and silver equities were weaker in pre-market activity after diverging negatively from the price of gold and silver during yesterday’s session.  The Philadelphia Gold & Silver Index (XAU) retreated 1.6% to 208.78 and sits lower by 7.9% in 2011.  Notable decliners on Wednesday included Gold Fields (GFI), Goldcorp (GG), and Kinross Gold (KGC).  GFI, GG, and KGC dropped 0.6%, 1.4%, and 1.2%, respectively.

On the two-year anniversary of the U.S. equity market bottom, stocks posted modest losses.  The Dow Jones Industrial Average (DJIA) inched lower by 1.29 points to 12,213.09.  Nonetheless, from its March 9, 2009 closing low of 6,547.05, the Dow Jones is now higher by 86.5%.  Over the same time frame, the S&P 500 has rallied 95.1% and the XAU has advanced 80.8%.  Equity futures pointed to losses on Wall Street today ahead of the opening bell.  S&P 500 futures fell 7.40 to 1308.

While record precious metals prices have made headlines, they have been overshadowed of late by movements in the price of oil.  Violence and protests in the Middle East and North Africa (MENA) have been key catalysts for movements in financial markets, and nowhere has this been evident more than in the price of oil.  The violence has been most noteworthy in Libya, where pro-Gaddafi forces struck an oil pipeline and storage facility on Wednesday as they traded gunfire with opposition fighters.

While many investors and market pundits are predicting oil prices of $120, $150, and even $200 per barrel in the months ahead due to the MENA crisis, oil industry insiders are not as bullish.  Rex Tillerson, CEO of Exxon Mobil, the world’s largest company, told CNBC that the turmoil in Libya is not a significant factor for the price of oil because the nation’s production accounts for just 1.5% of the global oil supply.  Tillerson’s comments helped send crude oil lower on Wednesday by $1.04, or 1.0%, to $103.98 per barrel.

Tomorrow’s report on retail sales and the University of Michigan Consumer Sentiment Index will be closely scrutinized after today’s weak employment data.  Chairman Bernanke has repeatedly alluded to the fact that monetary policy will remain accommodative as long as the labor market is soft.  The outlook for the gold price will continue to be bullish as long as real interest rates remain negative and the Federal Reserve considers deflation to be enemy number one.

(Source: http://www.goldalert.com/2011/03/gold-price-stabilizes-after-weak-jobs-data/)