Gold Price Steady, Remains in “Very Strong Bull Market”

GOLD PRICE NEWS – The gold price took a breather Friday morning following seven straight sessions of gains that took the yellow metal to its highest level since April 13th.  The price of gold held in a tight range between $1,665 and $1,675 per ounce in overnight trading and showed a muted response to the latest batch of U.S. economic data.  The U.S. dollar, which declined for the past several days, rebounded somewhat on Friday and helped keep a lid on the gold price.

While the price of gold stabilized near unchanged at $1,668 per ounce, silver continued to move higher, albeit by only $0.05 to $30.63 per ounce.   Nonetheless, gold’s sister precious metal climbed yesterday to as high as $30.79, its best level since May 2nd.  Furthermore, the price of gold and silver have advanced this week by 3.1% and 9.0%, respectively and are now up by 3.3% and 9.6% in August.

Gold shares were steady this morning in concert with the gold price, as the Market Vectors Gold Miners ETF (GDX) inched up by $0.04 to $47.46 per share.  Yesterday the GDX rose to as high as $48.15 before paring its gains, but now remains up by 4.7% this week.  Moreover, the gold stocks ETF has now jumped 10.9% in August – putting it on pace for its best month since April of 2010.

Notable gold miners in the black on Friday included Kinross Gold (KGC), Newmont Mining (NEM), and Yamana Gold (AUY).  Shares of KGC rose by 1.0% to $8.93, NEM by 0.2% to $49.15, and AUY by 0.4% to $16.73.  The gold sector held steady alongside the broader equity markets, as the S&P 500 Index recovered from a small sell-off at the open to trade near unchanged at 1,403.71.

Gold prices held firm this morning despite a report showing that U.S. durable goods order rose 4.2% in July, well above the 2.5% consensus estimate among economists.  However, excluding transportation, orders declined by 0.4%, whereas economists were expecting a 0.5% gain.

The mixed data underscored the conundrum the Federal Reserve is facing at the present time regarding further quantitative easing.  While the Fed minutes earlier this week suggested that Chairman Bernanke and his fellow central bankers stand ready to launch QE3 in short order, the strong performance of financial markets – coupled with a rebound in economic data in August – may keep the Fed on hold at its meeting next month.

Nonetheless, the rally in gold and silver prices this week suggests that the markets believe that QE3 is coming sooner rather than later.  According to Charles Morris of HSBC Global Asset Management, “Additional stimulus is inevitable, the question is how it comes.”

As for the price of gold, Morris asserted that “There’s no doubt about it, this is gold’s moment. All the long-term trend signals suggest that gold is in a very strong bull market.”