Gold Price Digests French, Greek Election Results
By jturbin | May 7, 2012 7:28 PM IST
GOLD PRICE NEWS – The gold price dipped Monday morning, by $3.29 to $1,639.60 per ounce, as the U.S. dollar advanced modestly in the aftermath of elections in France and Greece. The price of gold held in a narrow range in overnight trading despite substantial volatility in financial markets across the globe. Stocks and cyclical commodities initially came under heavy selling pressure after French and Greek election results raised concerns that each nation will not adhere to various austerity measures aimed at alleviating the euro zone sovereign debt crisis.
Michala Marcussen, global head of economics at Societe Generale SA in Paris, noted in a report to clients that “Incumbents took a beating across Europe this weekend in what has been widely interpreted as a backlash against austerity. Failure to secure a political majority to meet the terms of the second Greek program could see the country inch towards euro exit. This would in our opinion be seen as a negative event, even beyond Greece’s borders.”
Silver turned slightly lower in concert with the price of gold this morning, by $0.18, or 0.6%, to $30.17 per ounce. S&P 500 equity market futures tumbled to as low as 1,342.50 late Sunday evening, but subsequently staged an impressive comeback as European markets turned higher. The S&P 500 Index opened moderately lower but recouped all of its losses to later trade near unchanged at 1,367.76.
Last Friday the gold price rose $5.25 to $1,642.89 per ounce amid disappointing employment data in the U.S. The price of gold posted a modest advance after the April non-farm payrolls report included job additions of 115,000 – substantially below the 160,000 consensus estimate among economists. While the unemployment rate unexpectedly fell to 8.1%, this was largely due to the fact that the labor force participation rate dropped to 64.3% – its lowest level since 1981.
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Silver responded favorably alongside the gold price to the weaker than expected jobs data, as it added $0.15, or 0.5%, to $30.35 per ounce. Gold shares posted moderate gains as well, with the Market Vectors Gold Miners ETF (GDX) closing higher by $0.16, or 0.4%, at $44.04 per share. Notable advancers on Friday included Gold Fields (GFI) and Newmont Mining (NEM) – which climbed by 2.2% to $12.68 and by 1.3% to $46.16 per share.
Commenting on the jobs data, PIMCO CEO Mohamed El-Erian stated that “Data point to sluggish job growth, declining labor market participation and for those employed, stagnant purchasing power. Consumption, as a growth engine, is less dynamic at a time when headwinds from Europe and a potential fiscal cliff are still material.”