GOLD PRICE NEWS – The gold price climbed back above the $1,500 per ounce level, rising $8.00 to $1,504 Monday morning. Silver rose alongside the gold price, advancing 3% to $36.72 per ounce after last week’s 27% crash. Renewed weakness in the U.S. dollar helped to re-energize investment demand for precious metals. The dollar fell 0.5% against the euro. The bulk of the commodity complex rose with crude oil futures gaining 2.3% to $99.39 per barrel.

Last week, the gold price suffered its largest weekly decline since December 2008, as it tumbled from a new all-time high of $1,577.40 to $1,495.65 per ounce. On Thursday, the gold price reached an intra-day low of $1,463, but rallied on Friday to cut its weekly loss to 4.3%. The sell-off in the price of gold was fueled by significant liquidation in precious metals and the broader commodities complex, by a rebound in the U.S. dollar, and finally by the death of Osama bin Laden.

The price of silver, in keeping with its trend this year of displaying significantly greater volatility than the gold price, plummeted last week. Silver came within inches of $50 per ounce last Monday for the first time since 1980, but subsequently plunged to as low as $33.04 per ounce. Gold’s sister precious metal also bounced back – to $35.64 on Friday – but still posted its largest weekly loss since 1978.

Alongside the sell-off in the price of gold and silver, precious metals equities posted substantial losses. The Philadelphia Gold & Silver Index (XAU) tumbled 9.0% last week, and extended its year-to-date decline to 10.8%. Among gold producers, Barrick Gold (ABX) and Newmont Mining (NEM) fell 8.2% and 8.3%, respectively. Notable silver companies moving lower included Pan American Silver (PAAS) and Silver Standard Resources (SSRI), which retreated 8.0% and 13.2%, respectively. Gold and silver equities moved higher Monday morning on the back of strong silver and gold prices.

While Friday’s better than expected jobs report would usually lead to weakness in the gold price, the considerable decline in the days prior had already discounted much of the negative impact on the yellow metal. Although the headline number of 244,000 exceeded the 185,000 consensus estimate among economists, under the surface the report included several worrisome signs, particularly in the household survey portion of the data.

Following the report, economists at Goldman Sachs lowered the firm’s 2011 GDP forecast to 2.7% from 2.9%, and reiterated its prediction that the Federal Reserve will not raise interest rates until 2013. The persistence of negative real interest rates has been one of the key drivers of the gold price over the past few years. Cash in the bank loses purchasing power on a daily basis and leads savers to seek out a store of value. Gold serves this role and until a decent rate of return on capital is offered, the gold price is likely to have a tailwind a its back.

William Dudley, President of the Federal Reserve Bank of New York, echoed the Fed’s dovish outlook after examining the jobs report. Dudley commented that “the labor market has shown further improvement. Yet the recovery remains moderate and we still have a considerable way to go to meet the Fed’s dual mandate of full employment and price stability.”

While last week’s economic calendar included several catalysts for the gold price, this coming week is no different. Wholesale inventories are scheduled for Tuesday, followed by the MBA Mortgage Index on Wednesday. Two key reports on inflation, the Producer Price Index (PPI) and Consumer Price Index (CPI) will be released on Thursday and Friday, respectively. Thursday’s schedule also includes weekly jobless claims and the retail sales for April, while the University of Michigan Consumer Sentiment Index will be reported on Friday.

Source: http://www.goldalert.com/gold-price-recaptures-1500-silver-rises-3/