Alongside the gold price, silver also climbed off its morning lows following the jobs data, trading at $28.70 per ounce – compared to a low of $28.32 before the release. The U.S. dollar gave up its gains, hovering near unchanged against most of America’s trading partners.
The correction in the gold price has weighed heavily on the share price of gold mining producers and explorers. The AMEX Gold Bugs Index (HUI) has dropped 7.2% thus far in 2011 and has moved lower every single day this week. Notable HUI components moving lower in pre-market trading included AngloGold Ashanti (AU) and Newmont Mining (NEM).
With today’s decline, the gold price is now lower by 4.1%, in 2011. The yellow metal has fallen for each of the first four trading days this year, an occurrence not seen since 2005. Moreover, the price of gold is now on pace for its worst week since the 4.3% plunge witnessed from May 17-21, 2010. Relative to its $1,432.50 all-time high set on December 9, the gold price has now slid $61.03, or 4.3%.
Across the Atlantic, yields on Spanish and Portuguese government bonds continue to climb. Spain’s 10-year yield jumped 16 basis points to 5.49%, while the yield on Portuguese debt of similar duration rose 27 basis points to 7.18%, its highest level since late November. Belgium also experienced weakness, as credit default swaps surged 16 basis points to a new record high of 235, according to CMA.
Despite the gold price’s weakness and dollar’s rally, many market strategists remain particularly bullish on the price of gold. Barclays Capital was the latest firm to issue its 2011 forecast for the price of gold, predicting an average gold price of $1,495 and a high of $1,620 per ounce. “A clouded macro environment against a backdrop of low interest rates, growing uncertainty surrounding currency debasement and medium-term inflation fears as well as geopolitical tensions continue to stoke investor’s appetite for a portfolio diversifier and a safe haven,” wrote Barcap’s precious metals analyst, Suki Cooper.
As for silver, Barclays predicted an average price of $29.10 in 2011, along with a high of $36.50 per ounce. Although silver mining supplies are substantial, according to the firm, investor interest is expected to remain strong. Moreover, Barclays noted that silver is likely to advance in concert with the rising price of gold in the coming year.
The weak employment data is likely to provide more ammunition for Chairman Bernanke to continue the Fed’s zero interest rate policy as well as its asset purchase program. With investors facing a negative real rate of return on their savings held in money market accounts, the allure of gold should continue to be strong. For the latest updates PRESS CTR + D or visit Stock Market news Today
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