Precious Metals Remain Under Pressure, XAU Falls 2.5%

Precious metals remained firmly in negative territory on Thursday afternoon amid widespread weakness in the commodities complex. COMEX gold futures settled lower by $16.30, or 0.9%, at $1,713.80 per ounce.  Silver futures at the COMEX fared a bit better, finishing down by only $0.21, or 0.6%, at $32.67 per ounce.

Gold and silver shares underperformed the metals, as the Philadelphia Gold & Silver Index (XAU) retreated by 2.5% to 164.36.  In doing so, the XAU stretched its loss thus far in November to 12.7% and reached its lowest level since August 31st.

A few of the worst performing XAU components on Thursday were Agnico-Eagle Mines (AEM), New Gold (NGD), and Silver Standard Resources (SSRI).  Shares of AEM fell by 5.0% to $51.63, NGD by 4.5% to $9.66, and SSRI by 3.5% to $12.88.

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(Rankings and analysis on every XAU component available at GoldAlert Pro – http://pro.goldalert.com)

Today’s decline in the price of gold was not accompanied by strength in the U.S. dollar, however.  Instead, it was in large part driven by a report from the World Gold Council (WGC), according to Richard Hastings, a strategist at Global Hunter Securities.

In a note to clients, Hastings wrote that “A weak demand summary from the World Gold Council partly influenced by very tough year-over-year comparisons to the big runup in gold demand associated with the U.S. budget fiasco in August 2011” was the driving force behind the sell-off.

Specifically, the WGC disclosed that global demand for gold dropped by 11% to 1,084.6 tonnes in the third quarter of 2012 relative to the third quarter of last year.  The report cited lower demand from China as well as a reduction in jewelry demand for the yellow metal.

On the positive side, however, the report noted that global investment in exchange-traded funds surged by 56% from the prior year period.  Marcus Grubb – managing director, investment at the World Gold Council – commented that “It is clear from five-year rising demand trends that gold’s fundamental property as a vehicle for capital preservation continues to endure, as evidenced by this quarter’s increase in global ETF investment…and continued purchasing by central banks, the ultimate long-term investors.”

Among other precious metals, platinum futures dropped by 1.5% to $1,571.30 per ounce while palladium slid 1.6% to $634.15 per ounce.  As for cyclical commodities, crude oil futures declined by 1.0% to $85.45 per barrel while copper bucked the trend to close up by 0.3% at $3.46 per pound.