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Turmoil in Greece and Ukraine is failing to offset concerns about Chinese gold demand. It remains to be seen whether the release of minutes from the Fed’s January meeting will provide some relief.
Gold dipped below the $1,200-per-ounce mark Wednesday afternoon as turmoil in Greece and Ukraine failed to offset concerns about Chinese gold demand. The yellow metal was sitting at $1,198.20 per ounce as of 1:30 p.m. EST after hitting an intraday low of $1,203.66, its lowest level since January 6, the previous day.
According to Bloomberg, the fall is in part the result of investors speculating that gold demand out of China will sink during the Lunar New Year holiday. The event will see markets in the Asian nation close for five sessions starting Wednesday.
The situation in Greece has not been able to counter that concern. Though it sparked some safe-haven demand for gold earlier this week, its impact has been limited. That’s partially because a compromise between the country and its international lenders is expected to be reached this week, but as a recent Kitco article states, it’s also because “[m]any traders and investors have become numb to the EU sovereign debt crisis news, which is now several years old.”
Uncertainty about the ceasefire between Ukraine and Russia has also done little to help the gold price. Though Kitco notes that the deal “is on shaky ground amid reports of fighting in some cities in eastern Ukraine,” investors are apparently not worried enough about it to buy into gold.
Looking forward, investors will be watching the US Federal Reserve, which is set to release the minutes of its January meeting Wednesday afternoon. Speculating about what the release may bring, Adam Koos, president of Libertas Wealth Management Group, told MarketWatch, “[g]old will likely find a soft landing if the minutes reflect a dovish tone. However, policy speculation has definitely been shifting toward a potential rise in interest rates sometime in 2015 — it’s also been hinted at by a few of the Fed officials.”
Stocks round-up
The gold price drop hasn’t been kind to many companies focused on the yellow metal, but a few have been able to keep their heads above the water. Here’s a look at five gold companies that were up moderately on Wednesday:
- Galane Gold (TSXV:GG) — up 6.25 percent at $0.17
- Golden Queen Mining (TSX:GQM) — up 3.95 percent at $1.58
- Midas Gold (TSX:MAX) — up 1.01 percent at $0.50
- Dundee Precious Metals (TSX:DPM) — up 1 percent at $3.04
- Eldorado Gold (TSX:ELD) — up 0.49 percent at $6.20
One other company up significantly is Gold Royalties (TSXV:GRO). Sandstorm Gold (TSX:SSL,NYSEMKT:SAND) just announced plans to acquire the company, and Gold Royalties’ share price leaped over 70 percent on the news. Read our update on the deal here.
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.