Gold Prices Fall as Inflation Data and Euro-Zone Concerns Ease

Strategic Insights -

Gold prices fell sharply on the Comex division of the New York Mercantile Exchange as weak US inflation data and a decline in euro-zone concerns weighed on investor demand. The most actively traded contract, for December delivery, settled down $1.50, or 0.1%, at $1,336.90 per troy ounce. Traders were disappointed by the steady US inflation data, with the consumer price index rising 0.2% in October, less than the 0.3% forecast. Core consumer prices, which exclude food and energy, remained unchanged since July, while annual underlying inflation was at 0.6%, the lowest level since records began in 1957.

Key Takeaways:

  • The Comex gold futures contract for December delivery settled down $1.50, or 0.1%, at $1,336.90 per troy ounce.
  • US inflation data showed a 0.2% rise in consumer prices in October, less than the 0.3% forecast.
  • Core consumer prices remained unchanged since July, while annual underlying inflation was at 0.6%, the lowest level since records began in 1957.
  • Easing euro-zone concerns and a stronger dollar led to a decline in investor demand for gold.
  • CME Group raised trading margins on gold, platinum, and palladium, reducing liquidity in the precious metals complex.

Ira Epstein, director of the Ira Epstein division of the Linn Group, noted, "There's a question of when and if inflation will come into being given core CPI came out today at levels not seen since 1957." Dave Meger, head of trading at Vision Financial Markets, added, "The sovereign debt issue in Europe, specifically Ireland, is weighing on prices."

Statistics:

  • $1.50: Theprice drop for the Comex gold futures contract for December delivery.
  • $1,336.90: The settlement price for the Comex gold futures contract for December delivery.
  • 0.2%: The rise in consumer prices in October.
  • 0.3%: The forecast for consumer price index rise.
  • 0.6%: Annual underlying inflation, the lowest level since records began in 1957.
  • 1957: The year in which records of core consumer prices began.
  • 0.1%: The decrease in gold prices.
  • $1.3532: The euro rate against the dollar.
  • $1.3490: The euro rate against the dollar on Tuesday.
  • 7 weeks: The period in which the dollar has been trading at highs.

Sources:

  • Dow Jones Commodities News via Comtex
  • Dow Jones Newswires
  • Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
  • Ira Epstein, director of the Ira Epstein division of the Linn Group
  • Dave Meger, head of trading at Vision Financial Markets
  • CME Group
  • New York Mercantile Exchange (Comex)