GOLD PRICE NEWS – The gold price retreated moderately on Tuesday, giving back a portion of yesterday’s advance, after a mixed bag of U.S. economic data this morning. The spot price of gold held near $1,585 per ounce in overnight trading, but fell $8.21, or 0.5%, to $1,576.34 per ounce after a better than expected report on the U.S. housing market. With today’s decline, the gold price cut its monthly and year-to-date gains to 0.9% and 0.8%, respectively.
This morning, Standard & Poor’s (S&P) reported that the Case-Shiller index of home prices in the U.S. fell 1.9% in April on a year-over-year basis – less than the 2.5% drop economists were expecting. On a sequential basis, the index rose 1.3%. The encouraging home price report was a welcome respite for the economy, which has delivered numerous disappointing data points in recent months.
David Blitzer, chairman of the index committee at S&P, noted that “It’s been a long time since we enjoyed such broad-based gains.” He went on to say that “While one month does not make a trend, particularly during seasonally strong buying months, the combination of rising positive monthly index levels and improving annual returns is a good sign.”
In contrast to the Case-Shiller data, the latest reading on U.S. consumer confidence came in at 62.0 –below the 63.0 consensus estimate among economists. Robert Dye, chief economist at Comerica Bank, commented that “In addition to weak job growth here in the U.S., we’ve got three big risk factors – Europe, Asia and the fiscal cliff – to deal with. Consumers are probably feeling leery. Gasoline prices will help, but that gets overwhelmed.”
Silver fell more sharply than the price of gold on Tuesday, by $0.40, or 1.5%, to $27.19 per ounce. In addition, after outperforming the yellow metal earlier this year, silver has significantly lagged the gold price in recent months. Thus far in June, silver is now down by 2.3%, and by 1.9% in 2012.
Gold shares took it on the chin this morning as the price of gold extended its losses, with the Market Vectors Gold Miners ETF (GDX) sliding $0.96, or 2.2%, to $44.20 per share. The sell-off reduced the GDX’s advance in June to 1.0% and extended its year-to-date loss to 14.1%. Notable decliners this morning included Kinross Gold (KGC) and Newmont Mining (NEM) – which fell by 1.9% to $8.25 and by 2.0% to $47.79 per share, respectively.
While the gold sector headed south, the broader equity markets clung to fractional gains in morning trading. The S&P 500 Index inched higher by 0.2% to 1,316.15, while financial markets in Asia and Europe were mixed. In the currency markets, the U.S. Dollar Index oscillated between gains and losses near 82.501, while the euro slipped 0.3% to 1.2469 against the dollar.
Looking ahead for the gold price, Anne-Laure Tremblay – a precious metals strategist at BNP Paribas – wrote in note to clients that “Gold looks fragile at the moment. It could rebound if U.S. durable goods orders (the next economic report on the calendar) disappoint tomorrow, as the market would then anticipate a greater probability of the Fed easing.”