Gold Price Tumbles on Heavy Volume at the COMEX

GOLD PRICE NEWS – The gold price turned sharply lower on Wednesday, dropping as much as $33.85, or 1.9%, to $1,707.94 per ounce.  The sell-off in the price of gold coincided with a significant rise in volume at the COMEX as traders liquidated positions in the yellow metal.  At approximately 8:20am ET, the moment of the largest decline thus far today for gold prices, 7,805 contracts traded, as opposed to no more than 1,721 contracts at any other time this morning.

The SPDR Gold Trust (GLD), the world’s largest gold ETF and a proxy for the gold price, retreated by as much as $3.42, or 2.0%, to $165.29 per share.  However, the price of gold was later able to recoup a portion of its decline as it returned to near $1,720 per ounce.

Weakness in the price of gold coincided with further strength in the U.S. dollar, which has risen noticeably this week against many of the world’s other major currencies.  The U.S. Dollar Index turned modestly higher this morning, by 0.2% to 80.589.

Gold stocks initially slid in concert with the gold price, but the sector quickly pared its losses alongside the broader equity markets.  The Market Vectors Gold Miners ETF (GDX) dropped by as much as $1.21, or 2.6%, to $46.25 per share but later traded down by only 0.8% at $47.06 per share.  The rebound mirrored that of the S&P 500 Index, which retreated 1.0% to 1,384.43 before subsequently climbing back to 1,396.67.

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Within the gold sector, notable gold stocks in the red included Agnico-Eagle Mines (AEM) and Harmony Gold (HMY) – which dropped by 1.3% to $54.63 and by 1.6% to $7.79 per share, respectively.  Alternatively, two of the best performing gold miners this morning were Kinross Gold (KGC) and Randgold Resources (GOLD) – which rose by 0.7% to $10.32 and by 0.9% to $104.85 per share, respectively.

Silver declined more substantially than the price of gold, by as much as $1.04, or 3.1%, to $33.00 per ounce.  Other precious metals headed south as well, with platinum futures slipping 2.2% to $1,583.00 per ounce and palladium tumbling 3.5% at $646.90 per ounce.  Among cyclical commodities, copper futures were off by 1.7% at $3.49 per pound while crude oil fell 2.1% to $85.36 per barrel.

Commenting on today’s sell-off in gold prices, Ole Hansen – a vice president at Saxo Bank – stated that “It seems like we are losing excuses to buy gold. The fact that we did not make any progress following the break (higher) on Friday could indicate that leverage buyers are still not prepared to engage, or they are closing down shop for the year.”

However, analysts at ScotiaMocatta argued that the outlook for the gold price remains positive as long as a certain condition is met.  “We continue to be bullish so long as gold holds above the 1705/06 lows from mid-November,” the firm asserted.