Debt talks continue to stagnate in Washington, but for the second consecutive day that wasn’t the headline driving motion in gold (NYSE:GLD) prices. The precious metal fell off -0.1% to $1,616.20 an ounce in trades today as the dollar gained strength again thanks to surprisingly positive indicators for the US economy. The housing market, arguably the sector hit hardest by the financial downturn, reported June pending home sales that were up 2.4% for the month, squashing economists’ expectations of a -3% downturn. Another shockingly bright mark was the initial jobless claims number, which dipped under 400,000 for the first time since early April, a sign that the anemic labor market might finally be starting to recover. Uncertainty over the ongoing political “debt crisis” had pushed gold prices to record highs earlier in the week, with futures closing at $1,616.80 per ounce on Tuesday.
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Now “safe haven” investing seems to have waned slightly, though experts continue to caution that gold will remain in demand until the situation reaches some conclusion. “A lot of people are turning to the gold market … but some are now realizing (the debt ceiling debate) is probably a political farce… [but] It’s just going to get higher until someone stabilizes the dollar,” added Michael Smith of T & K Futures and Options.
Other precious metals took a steeper downturn on commodities markets today. Silver (NYSE:SLV) was the leading loser in metals, dropping -1.9% to close at $39.79 an ounce. Platinum and Palladium followed suit, losing -0.9% and -0.6% in tandem. Copper was the only gainer among precious metals, adding 0.56% to close at $4.47. The red metal is widely used in construction of new homes, so the home sales data was likely a large boon to forecasts of copper demand.