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Gold prices fall, tap US Election Day lows

The US 1,686 price was the lowest level seen for the precious Yellow metal since Election Day on 6 November when Gold rose by more than 30 an ounce to break away from a then intra-day low of 1,683.50.

Gold prices continued to fall Wednesday below psych support a day after it settled at its lowest level in more than a month.

Gold for Feb delivery fell 2 to 1,693.80 oz, it traded as high as 1,708.30 and as low as 1,686, the spot price was off 3.70 oz

A stall in F-Cliff negotiations and some possible institutional selling of Gold drove price on Tuesday South by more than 25, Wednesday’s action saw the commodity off a bit against a strengthening USD.

Silver prices for Mar delivery fell 0.15 to settle at 32.96 oz.

Crude Oil (WTI) 87.89 -0.61 (-0.69%)

The USD index added 0.10% to $79.75.

Gold benefited early in the trading session from new Chinese Communist Party Chief Xi Jinping announcing that the country is considering more infrastructure investment.

The possibility of Chinese stimulus to infrastructure could have a positive effect on Gold as an inflation hedge, should the government there implement the program.

Gold’s price began to fade toward the flatline shortly before Automatic Data Processing’s employment change report said the United States added 118,000 jobs in November. Economists had predicted some 125,000 jobs.

A Goldman Sachs NYSE:GS research note Wednesday said that it is seeing growing downside risks for Gold in Y 2013 as its analysts have forecast improving conditions in the US economy.

“In the short term, the combination of more easing and weaker growth should prove supportive to gold prices although our modeling suggests that these catalysts are to some extent already priced in. Medium term however, the gold outlook is caught between the opposing forces of more Fed easing and a gradual increase in US real rates on better US economic growth,” the research note said.

The bank lowered its forecast for 3, 6, and 12-month Comex Gold prices to 1,825, 1,805 and 1,800 respectively, from 1,840, 1,940 and 1,940 oz.

Gold ETF SPDR Gold Trust NYSEArca: GLD was off 0.24%, while iShares Gold Trust NYSEArca:IAU was off 0.25%.

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Heffernan Capital Management
Sales@Heffcap.com

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