Is There Any Support For Gold Prices?

Gold prices turned down to trade at 1146.00 giving back $7.80 in the morning session. The US dollar gained 38 points to 96.48 after Janet Yellen turned up the volume on interest rate increases in 2015. Yellen more or less assured the markets that she would push for an increase this year. Silver dipped 55 points to 15.075 after climbing earlier this week above the $14 price. Platinum gave back $6.45 to 949.45.

Federal Reserve Chair Janet Yellen on Thursday argued that the U.S. recovery is unlikely to be bogged down by the sluggish global economy and reiterated plans to begin withdrawing the central bank’s extraordinary stimulus this year. Her speech at the University of Massachusetts-Amherst offered a relatively optimistic view of America’s prospects despite ongoing fears of a slowdown in China and turmoil in world financial markets. So far, Yellen said, those concerns do not warrant a change in the fundamental outlook at home.

Before bouncing back from the lows Thursday afternoon, the S&P 500 briefly fell into correction, dropping 10% below its most recent intraday high set on May 20.

The markets have had a bad week on a slew of confusing and negative news. The S&P 500 has suffered losses every day this week while the Dow has lost 600 points since last Thursday. The NASDAQ, which also rallied after going into correction territory, has erased all its gains for the year.

Several members of the Federal Reserve’s committee spoke publicly earlier this week to clarify why the central bank didn’t raise its key interest rate last week. But their comments only confused investors more.

Gold has been shining since the broader stock market started convulsing in August.

The SPDR Gold Shares (GLD) exchange-traded fund, a popular ETF that seeks to mimic the price of the actual metal, is up more than 5% since the end of July while the S&P 500 is down 9%. What’s more, the Market Vectors Gold Miners ETF (GDX), which owns Newmont and other big miners like Goldcorp (GG), Rangold (GOLD) and Barrick (ABX), has also held up well lately, gaining nearly 2% in the past two months.

It makes sense. Gold is often considered a safe haven during global economic turmoil. “Investor uncertainty is helping. Gold is a place people move into when they are worried about the market. There is a definite increase in physical demand for the metal as well,” said Chris Gaffney, president of EverBank World Markets.

The GLD ETF is still down nearly 3% this year and more than 40% below its all-time high from four years ago. Gold prices are currently around $1,150 an ounce — a far cry from their record not adjusted for inflation of more than $1,920 in September 2011.

Gold’s peak took place during the last stock market correction — a 10% pullback from a recent high — prior to this one. Stocks plunged in the aftermath of Standard & Poor’s downgrading the credit rating of the United States in August 2011.