Precious Metals Market Report by Bill Musgrave – American Gold Exchange
Austin — Gold dropped 1.4% to close under $1,180 as lower oil prices and upbeat U.S. economic data eroded its safe-haven allure.
Crude tumbled 3.2% after Saudi oil minister Ali Al-Naimi reaffirmed that OPEC will not cut production. Oil has dropped more than 20% in recent weeks—and more than 40% this year—as slowing global growth and rising U.S. production cause a glut in supply.
Crude prices are expected to rebound in 2015, according to a new Reuters survey, as lower demand results in cutbacks in production by non-OPEC producers. Surveyed economists are forecasting price gains of around 50% next year, which should lend support to gold. Rising oil typically signals higher expectations for future inflation, lifting gold because of its widespread use as an inflation hedge.
The Chicago Fed’s index of national economic activity rose substantially in November to post its best three-month stretch since 2010. The Dow and the S&P 500 closed at a new record highs on the upbeat data, shaking off reports that sales of existing homes dropped in November to a six-month low.
The other precious metals were mostly lower, with silver and platinum sliding 2.1% and 1.2%, respectively, while palladium picked up 1.3%.
At the Comex close: February gold dropped $16.20 to $1,179.8; March silver for lost 34 cents to $15.688; January platinum slid $14.90 to $1.182.10; and March palladium picked up $10.15, to $815.25 an ounce.