The gold price oscillated near $1,830 per ounce Thursday, trading near unchanged on the day. After sliding off its $1,913 all-time high posted on Aug 22, the price of gold has been held in check under $1,850 as investors and traders weigh whether a deeper correction is in the offing.
Economic figures continue to be scrutinized for clues as to whether the recent deterioration in data is merely a pause in a recovery, or a double-dip recession is forthcoming. Tomorrow’s unemployment report from the Labor Department will offer information as to whether the jobs market continues to stagnate. The lack of job creation has helped keep central bankers in the dovish camp with respect to monetary policy – a fact that has helped boost the gold price.
On Wednesday, the spot gold price fell $10.11 to $1,825.51 after trading in a wide range between $1,815 and $1,840 yesterday. The SPDR Gold Trust (GLD), the world’s largest gold ETF and a proxy for the gold price, slid $1.38 to $177.72 per share.
Silver deviated from the gold price yesterday, rising 0.6% to $41.57 per ounce amid widespread gains in industrial commodities. Gold and silver shares finished mostly lower, with the Philadelphia Gold & Silver Index (XAU) dipping 0.3% to 217.96. Among gold producers, Goldcorp (GG) and Kinross Gold (KGC) retreated 0.8% and 1.2%, respectively. As for silver mining companies, Pan American Silver (PAAS) fell 0.2% and Silver Standard Resources (SSRI) slid 0.4%. Gold mining stocks traded near unchanged Thursday morning.
The weakness in the price of gold was driven by two better than expected pieces of economic data. The Chicago Purchasing Managers Index for August came in at 56.5, above the 53.1 consensus estimate among economists. U.S. factory orders rose 2.4% in July, beating the 1.9% rise the market was expecting. However, the positive data was tempered by the worse than expected ADP employment report – which at 91,000 came in below economists’ estimates of 100,000.
Despite the yellow metal’s dip, the spot price of gold posted a 13.0% gain in August. This marked the best month for gold since 2001 when the current bull market was in its infancy. COMEX gold futures climbed 12.3% in August, surpassed only by a 12.8% surge in November 2009.
Looking ahead to September – which is historically the best month for gold prices – the upcoming Federal Open Market Committee (FOMC) meeting is likely to serve as the key catalyst for the yellow metal. Michael Churchill, head of Churchill Research, wrote in a note to clients that he expects the Fed to expand its easy monetary policies at the September meeting.