Gold Finishes Lower After Pressure from the Dollar (ABX, GOLD, GLD, GDX)

Gold futures declined today as a reaction to the stronger dollar. In addition to the stronger dollar, traders also sold off previously bought positions before the US Jobs report comes out this Friday.

January Gold futures fell to $1,133.10 per ounce in the New York Mercantile Exchange Comex Division. February futures also fell $2.80 to $1,133.70.
Traditionally, Gold is seen as a hedge for the dollar, so when the dollar rises, the price of this precious metal decreases.

The rise of the dollar that contributed to the drop in Gold prices can also be attributed to the stronger tone it showed as Japan’s Finance Minister said that he was looking for a softer Yen. In addition, China has sold its benchmarked three month bills at 1.3684%, showing a shift in policy towards preempting inflation risks. The better than expected US Initial Jobless claims also played a good part in the increase of the dollar.

Silver, on the other hand, fared better than Gold, with a gain of 17 cents to $18,345. Traders will be more likely to buy silver because it will be more active as it has more industrial use than Gold. Hedge funds are also known to buy more of this metal than they do of Gold.

Stocks that deal with the storing, processing and mining of Gold were also affected by the drop in Gold Prices. Barrick Gold Corp. (NYSE: ABX) dropped 1.41% to $41.17 a share, Randgold Resources Ltd. (NASDAQ: GOLD) dropped 0.50% to $83.90 a share, and Gold Fields Ltd fell 2.50% to $13.52 a share. Some Gold companies fared better, like Kinross Gold Corp which went up 0.20% to $20.12 a share, Compania de Minas Buenaventura Sa (NYSE: BVN) edged up 1.29% to $37.69 a share, and Paramount Gold and Silver Corp (AMEX: PZG) went up 10.19% to $1.73 a share.

Exchange Traded Funds were also affected by the drop in Gold Prices as Market Vectors Gold Miners ETF (NYSE: GDX) dropped 0.45% to $49.12 a share. SPDR Gold trust also dropped, falling 0.62% to $110.82 per share.