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Gold Dips as Central Banks Stall on Stimulus (Update 1)

Updated from 10:03 a.m. EDT with settlement prices

NEW YORK ( TheStreet) -- Gold prices sank for a third straight session Thursday as a lack of central bank action failed to fuel the yellow metal's allure.

Gold for December delivery fell $16.60 to settle at $1,590.70 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,618.80 and as low as $1,586.30 an ounce, while the spot price was down $13.90, according to Kitco's gold index.

"I think the overriding themes here, it's the troika here of the Fed yesterday, the ECB today and jobs numbers tomorrow; after that we have to go on vacation most practically until September," said John Nadler, senior analyst at Kitco Metals, referring to the Federal Reserve and European Central Bank announcements.

Silver prices for September delivery dipped 54 cents to $27, while the U.S. dollar index was rising 0.36% to $83.38.

The Federal Open Market Committee failed Wednesday to reveal any immediate quantitative easing policy, a week after a report said sentiment for action had gained among Fed officials.

Though the Fed used new language that it would "closely" monitor economic developments, it did not signal if it would actually follow through with so-called QE3.

"The message from yesterday seemed to be, in our view, that the Fed was the same: 'Well let's leave it for now and come back in September and we'll look at it again,'" said Will Rhind, managing director at ETF Securities U.S.

Rhind said he didn't think there was any huge catalyst for gold from the ECB's Thursday announcement, which he said was reflected in the fact that gold has remained rather range-bound. The ECB left rates unchanged Thursday at a record low 0.75% and failed to signal additional stimulus measures.

Friday's monthly employment report is one of the more crucial indicators for gold prices as the Fed repeatedly has said that it would consider action if unemployment continued to deepen.

Economists, according to Econoday, expect July nonfarm payrolls to increase 100,000 -- which is lower than the 150,000 needed for strong economic growth -- but for the unemployment rate to remain at 8.2%.

A better-than-expected result could hurt gold prices in the near term, but a miss may give the precious metal a bump. But short-term movements may be all the Friday jobs number can provide to gold.

"It's entirely conceivable that after 11.5 years we're going into two- or three-year mode where gold is either flat or negative returns," said Nadler. "And that's not going to be lethal, per se, it's to be expected."

Gold mining stocks were mixed Thursday. Barrick Gold (ABX - Get Report) and Agnico-Eagle Mines (AEM - Get Report) were flat. Randgold Resources (GOLD - Get Report) was the biggest gainer, up 1.3%.

Among other mining stocks, Kinross Gold (KGC - Get Report) and Newmont Mining (NEM - Get Report) were down 3.9% and 0.8%, respectively.

-- Written by Joe Deaux in New York.

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AEM $45.98 5.00%
ABX $18.31 4.90%
GOLD $87.29 2.30%
KGC $5.29 4.34%
NEM $33.54 3.70%


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