Gold and silver prices melted down further Thursday as the
dollar strengthened against the euro following disappointing
European economic reports and officials disparaging the
Spot gold prices fell 0.46% to $1,636 an ounce.
SPDR Gold Shares (
), tracking a 10th of an ounce of bullion, tumbled 0.54% to
158.20 on the
stock market today
. It tumbled to a seven-month low as it undercut a December low,
opening the door to fall to its August low.
PowerShares DB U.S.
Dollar Index Bullish (
), measuring the greenback against a basket of major foreign
currencies, jumped 0.41%, owing to weakness in the euro.
CurrencyShares Euro Trust (
), tracking the euro against the dollar, dropped 0.74%. Data
showed the eurozone's gross domestic product shrank 0.6% in the
fourth quarter, missing expectations of a 0.4% contraction.
"The greatest risk to gold is a U.S. dollar rally," John
LaForge and Warren Pies, commodity analysts at Ned Davis Research
Group, wrote in a report Thursday.
What would make the dollar appreciate?
"Continued improvement in America's budget would help. The
shrinking budget deficit over the last few years has had at least
some part in stopping the dollar's fall," LaForge and Pies wrote.
"The CBO (Congressional Budget Office) is projecting more
shrinkage in 2013."
Improvements in America's trade balance would support the
dollar. And historically the first years of a presidential cycle
have been the strongest for the greenback. LaForge and Pies
believe the dollar will go sideways. The dollar weakened under
the first and second quantitative easing programs and it will
likely lag commodity-based currencies such as the Australian
dollar under QE3.
The bottom line: "A return of confidence in paper money, and
the governments that print it, will likely spell the end of the
secular gold bull story," they wrote.
Market Vectors Gold Miners ETF (
) rose 0.58% to 41.44. GDX trades below both its 50- and 200-day
moving averages, which indicates a strong downtrend. It's fallen
28% below its 52-week high.
Julian Close of Market Intelligence Center listed gold miners
as one of the
"Five Industries to Get Out Of Now"
in a report Thursday.
"In the absence of a global financial meltdown, the price of
gold will likely continue its current slow decline," Close wrote.
"If such a meltdown were to occur, its price would likely fall
farther and faster.
"The commodity trades at an enormous premium to its industrial
value, and even at a premium to its decorative value," he
World Gold Council Q4 Report
Demand for gold reached a record dollar value in 2012, owing
to strong appetites from central banks worldwide, according to
the World Gold Council. Gold demand in dollar terms totaled
$236.4 billion -- an all-time high -- last year, according to the
WGC's fourth-quarter report released Thursday. Here are some
other key facts from the report:
1. By volume, demand rose 4% in the fourth quarter from the
year-ago period to 1,195 tons but fell 4% year over year in
2. Gold sold for an average of $1,669 an ounce last year, up
6% over the prior year's average.
3. Investment demand for
, gold bars and coins fell 8% year over year in Q4.
4. Jewelry demand climbed 11% year over year to 525 tons in
5. Technology demand fell 3% to 101 tons in Q4 and down 5% for
6. Supply from gold mines picked up 2% year over year, while
recycling dipped 5% in Q4. Supply for 2012 stayed the same as
7. Global central bank buying increased 29% to 145 tons in Q4
and 17% for the year to 535 tons -- the most since 1964.
8. Demand from China rose 1% in Q4 and was flat year over
9. Demand from India spiked 41% year over year in Q4 but fell
12% for the year.
"Despite the turbulent macroeconomic climate throughout the
year, as well as the regional uncertainties affecting India and
China, the two largest gold markets, annual demand was 30% higher
than the average for the past decade," Marcus Grubb, managing
director at WGC, said in a statement.
Silver prices dropped 1.2% to $30.42 an ounce.
IShares Silver Trust (
) skidded 1.23% to 29.41. It broke back below key support at its
200-day moving average, confirming a strong downtrend and is 19%
below its 52-week high.
Silver Miners ETF (SIL) lost 0.96% to 20.43. It's also moving in
a strong downtrend, having fallen below both its 50- and 200-day
lines and trading 23% below its 52-week high.
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