Monday, April 30, 2012

Interesting Gold Price Forecast for 2012

The gold price climbed $11.90, or 0.7%, to $1,654.89 per ounce on Friday as the commodities complex rebounded from yesterday’s losses.  The price of gold hovered near unchanged at $1,645 in overnight trading, but turned higher amid U.S. dollar weakness this morning.  Silver advanced alongside the gold price, by $0.31, or 1.0%, to $31.78 per ounce.  U.S. equity markets opened near unchanged this morning, with the S&P 500 down 0.1% at 1,391.52.

On Thursday the gold price continued its recent bout of weakness by falling $7.23, or 0.4%, to $1,642.99 per ounce.  The price of gold tumbled to $1,627.32 earlier in the day, but pared its losses as the U.S. dollar retreated from its intra-day high.  With the decline, the gold price reached its lowest level since January 13 and its year-to-date gain was reduced to 5.1%.

Silver fared considerably worse than the price of gold yesterday, as it dropped 2.2% to $31.47 per ounce.  Gold’s sister precious metal hit an intra-day low of $31.10 – its worst level in nine weeks – before also recouping a portion of its loss.  Nonetheless, silver remains higher by 13.5% in 2012 – making it one of the best performing commodities this year.

Gold shares came under further selling pressure in conjunction with the gold price on Thursday, with the Market Vectors Gold Miners ETF (GDX) sliding 2.0% to $48.75 per share.  In doing so, the GDX fell to its lowest closing level since August 11, 2010 and stretched its year-to-date loss to 5.2%.  Notable gold stocks moving lower included AngolGold Ashanti (AU), Eldorado Gold (EGO), and Royal Gold (RGLD).  AU slipped by 1.9% to $37.15, EGO by 1.8% to $12.88, and RGLD by 1.2% to $63.20 per share.

While the aforementioned companies posted noteworthy losses, the GDX’s worst performer on Thursday was Randgold Resources (GOLD).  Shares of GOLD plummeted $12.80, or 12.4%, to $90.60 per share after a military coup emerged and took control of the government in Mali – where Randgold has its Loulo and Morila gold mines.  Although the Company announced that its operations in Mali were “running normally,” investors chose to shoot first and ask questions later.
Yesterday’s gold price sell-off occurred in the midst of widespread liquidation in financial markets.  The primary catalyst for the decline was the latest data on Chinese manufacturing activity, which came in below economists’ estimates.  China’s preliminary Purchasing Managers’ Index (PMI) for March dropped to 48.1 and marked its fifth consecutive month below the key 50 level that separates expansion from contraction.

Following the disappointing Chinese data, the price of gold moved lower alongside commodities and stocks.  Copper futures retreated 1.9% to $3.77 per pound and crude oil sunk 1.6% to $105.51 per barrel.  The Dow Jones Industrial Average slipped 0.6% to 13,046.14 while the S&P 500 Index fell 0.7% to 1,392.78.

Despite the recent gold price weakness, one noteworthy and long-time gold bull reiterated his positive stance on the yellow metal.  Philip Klapwijk, Global Head of metals analytics at Thomson Reuters GRMS – the world’s leading metals consultancy firm – urged investors to use the recent sell-off to accumulate positions in gold.

Although the price of gold could dip below $1,600 in the short-term, Klapwijk asserted, he sees it rebounding to $2,000 per ounce either in late 2012 or early 2013.  Klapwijk based his bullish gold price view on expectations that real interest rates will remain negative for the foreseeable future and that the Federal Reserve and/or European Central Bank could launch new rounds of quantitative easing.

Let us know if you have gold to sell at or 801.889.7200

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