Gold Commodity Price

Gold closed up today as investors seem confused as to which way gold is heading and whether the gold commodity price is headed upwards, downwards, or sideways. Yesterday gold closed at $963 a troy ounce and today it closed at $966. Gold is traded in units of 100 ounces and trades under the base symbol GGC. Today’s gain, however, was not enough o offset yesterday’s loss of $20 an ounce. To recap, gold started the week at $978 then rose to $983 and then tumbled to $963 followed by a slight crawl to $966. This means in four days of trading gold has yielded a loss of $12 per troy ounce. Will this trend continue? It is hard to say.

Gold and oil are lower Monday. Commodities are priced in dollars, so when the currency increases in value commodities become more expensive and less attractive for foreign buyers.

The dollar’s latest gains follow a jump Friday that came when the government reported that employers slashed fewer jobs last month and that the nation’s unemployment rate fell for the first time in 15 months.

However, one commentator remains bullish on gold and is predicting that gold will reach a high of $7,000 per ounce. I do not see any others hopping on that bandwagon. At least not yet. Most investors seem almost paralyzed by this week’s gold activities and do not know what to make of the price decline. It appears most investors still have a wait and see attitude as to which way the gold commodity price will go.

The paper uses an event study methodology to investigate which and how macroeconomic announcements affect commodity prices. Results show that gold is unique among commodities, with prices reacting to specific scheduled announcements in the United States and the Euro area (such as indicators of activity or interest rate decisions) in a manner consistent with gold’s traditional role as a safe-haven and store of value. Other commodity prices, where such news is significant, exhibit pro-cyclical sensitivities and these have risen somewhat as commodities have become increasingly financialized.