GOLD - Trade close to $1,510 per ounce as the U.S. dollar built on its strong gains

Gold shares slid Friday, as the AMEX Gold Bugs Index (HUI) fell 1.7% to 505.48 in morning trading.

The sector was pressured by gold bullion, which turned lower after earlier holding steady near $1,520 per ounce. The yellow metal tumbled to an intra-day low of $1,505.40, before paring a small portion of its losses to trade close to $1,510 per ounce as the U.S. dollar built on its strong gains posted yesterday.

Weakness in the gold sector was fueled by a modest rally in the U.S. Dollar Index (DXY), which climbed 0.3% to 76.12 against a basket of foreign currencies.

One company in the gold sector under considerable pressure on Friday was AngloGold Ashanti (AU), which retreated $1.08, or 2.6%, to $40.38 per share. According to optionMONSTER.com, significant put buying in AU occurred on Thursday.

The firm noted that “6,170 August 39 puts traded, while there was no previous open interest. Almost all of those puts were bought, with the largest block of 4,575 picked up for $1.55, which was the ask price at the time.”

“There was no corresponding trading in the underlying shares, so this could be hedging of an existing long position against further declines. Or this could be a straight bearish bet, especially as they traded near the lows of the day. Those puts closed the day at $1.20.”

Other notable decliners in the gold sector included HUI components IAMGOLD (IAG) and Randgold Resources (GOLD). This morning, IAG and GOLD dropped 3.6% and 1.3%, respectively.

Comments

Post a Comment

Popular posts from this blog

Gold edges up on weaker dollar, dovish U.S. Fed policy bets

Image
 Gold edged higher on Monday, helped by a weaker dollar and expectations that the U.S. Federal Reserve will reiterate its dovish monetary policy stance this week. Spot gold was up by 0.1% at $1,943.58 per ounce. U.S. gold futures rose 0.1% to $1,950.10 per ounce. “Gold is firm on the basis that the Fed could adopt a further dovish message with respect to average inflation targeting,” said Michael Hewson, chief market analyst at CMC Markets UK. “If you want to have a policy of average inflation targeting, you’re going to have to go into detail as to how you are going to arrive at that particular outcome.” The dollar retreated on Mond ay, bolstering gold’s appeal for investors holding other currencies, ahead of the Fed’s policy decision due on Wednesday. “If inflation forecasts remain at 2% or below, this could offer gold a tailwind as the zero-yielding metal thrives in a low-interest rate environment,” said FXTM analyst Lukman Otunuga. Market participants are also waiting
Read more

For the gold price, two outcomes are possible.

Image
For the gold price, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June and December lows were not a double bottom and one further drop may come. I account that the least likely, and look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?   You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad
Read more

The price of gold advanced as high as $1,603.40 per ounc

Image
The gold price broke out to a new all-time high above $1,600 per ounce Monday morning, rising for the eleventh consecutive trading session. The price of gold advanced as high as $1,603.40 per ounce before backing off to trade just the $1,600 level. The yellow metal gained on the back of a surge in borrowing costs for Italy, the latest European nation to see its bond market come under heavy selling pressure. The lack of a deal to raise the $14.3 trillion debt ceiling also helped boost gold prices. The eleven-day rise in the gold price is the longest winning streak since January of 1980. The gold price delivered another noteworthy performance last week, climbing 3.2% on its way to a series of fresh record highs. With Monday’s advance, the gold price extended its monthly and year-to-date gains to 6.6% and 12.5%, respectively. Last week’s two-day Congressional testimony by Chairman Ben Bernanke on the economy and monetary policy revealed that the Fed remains open to the
Read more