Tuesday, October 16, 2012

Gold prices fall to their lowest level in a month – GLD, SLV, AUY, GG, ABX, NEM, KGC

Gold prices fell to their lowest in a month after China revealed data that showed that the country was a long way away from picking up momentum in economic growth.

Gold futures for delivery in December fell $22.10 to close at $1,737.60 an ounce, which is the lowest since September 12, a day before the U.S. Federal Reserve had announced new measures to revive the economy.

China's inflation figure slowed to 1.9 percent in September compared to 2 percent in August, while imports rose by 2.4 percent, a marginal improvement from the previous month but still weak by its standards.

Economists are not expecting much pick-up in China's economic growth in the September quarter and estimates are that it will be lower than the 7.6 percent growth achieved in the June quarter, which was a three-year low.

China will be releasing growth figures for its economy later this week.

Gold is usually an investment used as a hedge against inflation especially when currencies depreciate. Gold prices have been rising through most of the summer months when investors were expecting the European Central bank and U.S. to come up with new measures to stimulate their economies.

There is speculation whether China would announce any more measures to boost growth. Last month it had announced an ambitious spending plan on infrastructure projects to kick-start investment in the economy.

While China is growing faster than many of the advanced economies, still it is not doing as well as it is expected. Demand in China functions as a major catalyst of growth for other economies as well.

SPDR Gold Trust (ETF)(NYSEARCA:GLD) fell 1%, iShares Silver Trust (ETF)(NYSEARCA:SLV) clumped 2.50%.

Gold mining stocks were also under pressure with Goldcorp Inc. (USA)(NYSE:GG) was down 0.09% to $43.43, Barrick Gold Corporation (USA)(NYSE:ABX) slid 0.46% and Newmont Mining Corp(NYSE:NEM) fell 0.62%.

However, Kinross Gold Corporation (USA)(NYSE:KGC) rose 0.30% and Yamana Gold Inc. (USA)(NYSE:AUY) rose 1.28% to $18.93.

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