AFP: Gold below US$1,000 as key economic data strengthens the dollar
Commodity markets were generally quiet overnight, gold futures gained momentum in Europe as the session progressed. The December Comex contract approached last week’s highs to reach $1,021 this morning. That was before a slew of economic data and comment sent equity and gold markets scrambling.
Comments from the Federal Reserve and the European Central Bank prompted a period of volatility in the forex markets, which saw sterling come under pressure and the dollar experienced a relatively broad based rebound.
US Initial Jobless claims were reduced exceeding analyst expectations who expected a slight increase in claimants. US Existing Home Sales unexpectedly fell over 2½% against analyst forecasts which suggested that August home sales would rise.
This morning the Fed stated that it would reduce the size of its Troubled Asset Fund (TAF) following signs that the economic recovery was beginning to take hold. In its comments the Fed also reiterated that it “remains prepared to expand” liquidity if needed.
Subsequently the US Dollar Index gained 1% and gold fell $20 to trade below $1,000. Comex December Gold futures were changing hands at $995, while spot prices fell to $993, at around 11:00am in New York.
Following this morning’s developments Gold Stocks on Wall Street have endured a tough trading session so far, with all major gold producers falling.
Major International producer Randgold Resources (NYSE: GOLD) fell $1.90, losing over 2½% to trade at $10.54. Similarly Canada-based Yamana Gold (NYSE: AUY) dropped over 2%. The world’s largest gold producer Barrick Gold (NYSE: ABX) eased slightly, losing just 10c.
Second-tier gold miners also suffered, most equities were generally weaker in North America this morning.
Nevsun Resources (AMEX: NSU) was among the worst effected gold stocks sliding 7% in New York today. New Gold (AMEX:NGD) slid nearly 5%, Dual listed Eldorado Gold (TSX:ELD; NYSE:EGO) lost 4%.
Keegan Resources Inc (AMEX: KGN) and Mexico focused explorer Minefinders (AMEX: MFN) slipped more than 3% each. Agnico Eagle (NYSE: AEM) lost $2.74 to trade at $64.50.
South American focused exploration play Exeter Resource Corp (AMEX: XRA) lost 13c per share, dropping 2½%, while international gold producer IAM Gold (NYSE: IAG TSX: IMG) fell by a similar margin.
Multi-listed, Middle East focused Centamin Egypt (AIM: CEY, ASX: CNT, TSX: CEE) dropped almost 2%. Ontario based Rubicon (AMEX: RBY) dropped 11c to trade at $3.96.
Timmins Gold Corp (TSX-V: TMM) traded 2c lower to trade at 69c per share.
Elsewhere, Toronto Venture stock Victoria Gold Corp (TSX-V: VIT) traded one cent lower at 37 cents per share, meanwhile low-cost gold producer Gold Resource Corp (OTCBB: GORO) was 3 cents lower.
