This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Gold Prices Pop on Optimism From ECB's Draghi (Update1)

Stocks in this article: AUY EGO GG GLD IAU KGC

(Updated from 11:08 a.m. ET with settlement price and analyst comment.)

NEW YORK ( TheStreet) -- Gold prices popped Thursday after European Central Bank President Mario Draghi's announcement that economic conditions would improve in the eurozone later in 2013. Gold fell 0.4% on Wednesday.

Gold for February delivery added $22.50 to settle at $1,678 an ounce at the Comex division of the New York Mercantile Exchange. The gold price traded as high as $1,678.80 and as low as $1,653.80 an ounce, while the spot price was jumping $18.40, according to Kitco's gold index.

Draghi's comments put pressure on the U.S. dollar as the euro spiked by more than 1% on Wednesday. The yellow metal often benefits from a dip in the greenback as dollar-denominated gold becomes cheaper to purchase.

"Later in 2013, economic activity should gradually recover. In particular, our accommodative monetary policy stance, together with significantly improved financial market confidence and reduced fragmentation, should work its way through to the economy, and global demand should strengthen," Draghi said at a press conference.

Though gold reacted to the dollar's plunge on the euro currency's boost on the comments, one analyst argued the news from Draghi may still give investors pause moving forward.

"I don't know that I would call him optimistic," said Michelle Gibley, director of international research at Charles Schwab. "I would say that if you compare 2013 to 2012, Europe may not be as much of a drag on global growth, but they're still going to be sluggish."

Gibley pointed to austerity measures and under-capitalized banks as continuing major drags on the eurozone economy.

Silver prices for March delivery increased 67 cents to close at $30.92 an ounce, while the U.S. dollar index was plummeting 1.08% to $79.73.

"Gold was used as an investment that's supposed to not really correlate with the stock market -- that's why a lot of investors bought it, because they were afraid of the stock market," said Yoni Jacobs, chief investment strategist at Chart Prophet. "Over the last year or so you're seeing gold increasingly correlated with the market, so instead of becoming a riskless asset, it's actually become a risky asset."

The Labor Department reported on Thursday that initial jobless claims for the week ended Jan. 5 rose by 4,000 to 371,000. Economists had expected claims to total 365,000. The rise in jobless claims also could be seen as positive for gold prices as the Federal Reserve has pegged keeping interest rates near zero to a 6.5% unemployment rate threshold. Should the rate dip to that level, the Fed noted last month, the central bank would begin to raise interest rates. The national unemployment rate ticked up to 7.8% in December -- a signal that the Fed wouldn't end low interest rates and, possibly, the quantitative easing programs.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,191.37 -195.84 -1.13%
S&P 500 2,002.16 -27.39 -1.35%
NASDAQ 4,637.9940 -43.5030 -0.93%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs