The gold price held steady near $1,811 Monday morning as European sovereign debt concerns continued to weigh on financial markets. The price of gold climbed to as high as $1,832 per ounce in overnight trading but relinquished its gains ahead of the open of U.S. equity markets. In contrast to the gold price, silver declined alongside cyclical commodities, by 1.1% to $40.23 per ounce. The stability in the price of gold came after European policymakers failed to develop any new concrete plans for dealing with a potential Greek default in meetings over the weekend.
Last Friday the gold price advanced $19.85 to $1,811.25 per ounce as dip buying emerged in the precious metals space. The price of gold extended its gain after Germany delayed approval of regulations related to the European Financial Stability Fund (EFSF). COMEX gold futures rebounded from an intra-week low of $1,775 on Thursday to as high as $1,825 per ounce, before settling at $1,814.70.
Despite Friday’s rally, the spot gold price posted a weekly loss of $44.40 , or 2.4%. In doing so, the price of gold finished lower for the third week in the past four and now sits 5.8% below its $1,922.20 all-time record high, reached on September 6. Silver retreated last week alongside the gold price, as it fell $1.12, or 2.7% to $40.36 per ounce.
Gold and silver equities followed precious metals lower, as the Philadelphia Gold & Silver Index dropped 2.5% on the week. With its decline, the XAU snapped a five-week win streak, dating back to August 8. Barrick Gold (ABX) and Goldcorp (GG), the world’s two largest gold companies, slid 1.8% and 6.7%, respectively. Newmont Mining (NEM), the only gold stock included in the S&P 500, bucked the trend by rising 0.7%.
Commenting on the recent gold price weakness, UBS analyst Dominic Schnider wrote in a note to clients that “We’re in a consolidation, a very small one, since the beginning of September. Going forward now, we’re probably going to test somewhere the lows that we have seen at the end of August.” The level Schnider referred to occurred on August 25, when the gold price hit $1,704 per ounce.
While the sovereign debt concerns in Europe dominated the headlines last week, this coming week the focus is likely shift back to the United States. There the Federal Reserve will hold its two-day Federal Open Market Committee (FOMC) meeting on Tuesday and Wednesday. The Bernanke-led Fed recently chose to expand the meeting from one to two days due to heightened market and economic turmoil stemming from sovereign debt issues and concerns of a renewed recession in the U.S.