Gold Rebounds from Low as U.S. Bullion Coins Gain
Posted by Adam King on October 25, 2012
Gold stabilized and rebounded from a near seven-week low on Thursday during a shift in investor money towards the U.S. dollar and away from precious metals and commodities as stocks rebounded from Tuesday’s sell-off.
Gold dropped to a 7-week low following the Federal Reserve’s announcement on Wednesday afternoon that it was keeping to its current monetary policy in order to stimulate growth. The Federal Open Markets Committee met this week for a two-day session to discuss the monetary policy of the Federal Reserve and released a statement at the conclusion, fulfilling many expectations that policy, for the moment, is unchanged.
The price point marked a low since gold closed at $1,705.60 per troy ounce on September 6 of this year. The trade ranged from $1,705.10 to $1,731.20 per troy ounce.
In early trading on Thursday, U.S. gold for December delivery added $9.70 per troy ounce to $1,711.30. The spot prices of silver, platinum, and palladium also rebounded from lows.
Lackluster earnings reports and Moody’s downgrading of five of Spain’s regional governments spurred a 240-point drop in the Dow on Tuesday, the biggest drop in the index since June. The downgrading of Spain’s regional governments casts doubt on the recent rally in the euro that was brought on by regional elections favoring the incumbent political party, which is in favor of bailouts from the European Union.
Jeffrey Sherman, commodities portfolio manager at Double Line Capital LP which manages more than $45 billion in assets, told Reuters that gold is behaving like every other risk asset today with negative sentiment around the Moody’s downgrades on Spain peeling back all risk markets.
U.S. silver futures contracts for December delivery stabilized at $31.793 per troy ounce after dropping $0.459, or 1.4 percent, having touched intraday levels at $31.65 and $32.50 per troy ounce.
Fawad Razaqzada, technical analyst with GFT Markets, said in addition to technical selling long-term investors are being forced to liquidate more of the bullish positions in precious metals in order to free up margin for their losing equity positions.
Sales of U.S. Mint bullion coins advanced during the first two days of the week with each of the Mint’s American Eagle Gold Coins climbing with the $25 denominated Gold Eagle making the inaugural October sales appearance.
October sales of $50 American Eagle Gold Coins reached 44,500 for the month, bringing year to date totals to 455,000. American Eagle Silver Coins continued to outpace gold sales by a large factor with 2,584,000 sales for the month, bringing year to date totals to 28,379,000.