PM Recap: Central Banks Still Buying Gold Amid Consolidation

On Thursday, gold (NYSEARCA:GLD) futures for April delivery, the most active contract, fell $9.60 to settle at $1,635.50 per ounce, while silver (NYSEARCA:SLV) futures for March dropped 52 cents to close at $30.35.

Both precious metals experienced weakness as the U.S. dollar climbed higher. The latest report on gross domestic product in the euro zone provided support to the greenback. In the fourth quarter of 2012, GDP in the euro zone declined 0.6 percent from the third quarter, missing all estimates. It is an annualized decline of 2.3 percent, according to JP Morgan.

Although precious metals have been in consolidation mode for over a year, central banks continue to buy the safe-haven metal. According to the World Gold Council’s latest report, central banks purchased 145 tonnes of gold in the fourth quarter of 2012, the highest quarterly haul since the sector became net buyers in 2009. For the entire year, central bank buying surged 17 percent to 534.6 tonnes, the highest annual total since 1964. In comparison, central banks bought 456.8 tonnes in 2011.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 0.50 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped 1.2 percent. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Randgold Resources (NASDAQ:GOLD) both declined about 1 percent.

However, shares of Barrick Gold (NYSE:ABX) jumped 3.6 percent, despite reporting a net loss of $3.06 billion for the fourth quarter of 2012, compared to net earnings of $960 million a year earlier. Jamie Sokalsky, president and chief executive officer, says Barrick will better manage capital going forward. He explains, “We’ve made some significant strides in the implementation of a stricter, more disciplined approach to capital allocation – a model which continues to drive the future direction of the company.”

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Disclosure: Long EXK, AG, HL, PHYS