Gold Prices Firm after Weak Holiday Sales Data

GOLD PRICE NEWS –The gold price advanced moderately in thin trading on Wednesday morning as financial markets re-opened following the Christmas holiday.  The spot price of gold rose by $6.35, or 0.4%, to $1,666.05 per ounce after dipping to as low as $1,650.63 in overnight trading.  Strength in the gold price coincided with a modest decline in the U.S. Dollar Index, which fell by 0.2% to 79.487 against a composite of foreign currencies.

Silver turned slightly higher alongside the price of gold, by $0.08, or 0.3%, to $30.18 per ounce.  Among other precious metals, platinum futures inched up by 0.2% to $1,539.30 per ounce while palladium added 0.6% to $690.25 per ounce.  As for cyclical commodities, crude oil futures jumped 2.7% to $90.97 per barrel while copper climbed 1.5% to $3.60 per pound.

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The gold stocks sector trailed the gold price, but remained in positive territory this morning.  The Market Vectors Gold Miners ETF (GDX) rose by $0.04, or 0.1%, to $44.89 per share.  Gold stocks fared a bit better than the broader equity markets, however, as the S&P 500 Index dipped 0.1% to 1,424.96.

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Notable GDX components in the black included the world’s two largest gold stocks, Barrick Gold (ABX) and Goldcorp (GG).  Shares of ABX advanced by 0.3% to $33.86 while GG added 0.4% to $35.93.

The price of gold responded favorably on Wednesday to a disappointing report on U.S. retail sales for the holiday season.  The MasterCard Advisors SpendingPulse data, which tracks credit card usage, showed that sales in the two months leading up to Christmas rose by just 0.7%.  The gain was well below the 3-4% levels many economists were expecting, and marked the smallest increase since 2008.

Alternatively, the gold price held firm after an encouraging report on the U.S. housing market.  The Case-Shiller 20-city home price index climbed by 4.3% in October on a year-over-year, beating the 4.0% consensus estimate among economists.

Looking ahead, however, the fiscal cliff remains the most significant economic catalyst for the financial markets.  With the year-end deadline for tax hikes and spending cuts rapidly approaching, President Barack Obama cut his holiday vacation in Hawaii short to return to Washington D.C. while Congress is scheduled to reconvene tomorrow.