Tuesday morning saw gold falling from record territory set Monday as OPEC said it would consider increasing production. The news also sent Brent crude and U.S. oil futures down as profit-takers, relieved by OPEC’s news, sought to reap some of the gains made in the last few days.
Reuters reported that Kuwait’s oil minister mentioned that OPEC is in talks concerning its production rate, with an eye toward increase for the first time in more than two years. Sheikh Ahmad al-Abdullah al-Sabah said in the report, "We are in consultations about a potential output increase," but added that there was no decision yet regarding whether the group would begin to produce beyond its normal quotas. That news, however, was enough to soothe troubled markets and bring gold back from the brink of yet more records.
In early trading, spot gold gave back $2.89 an ounce, coming to rest temporarily at $1,427.85 an ounce; this was after Monday’s European high of $1,444.40. U.S. gold futures dropped too, losing $6 an ounce to come in at $1,428.50 after setting a record of $1,445.70 on Monday.
Gold ETFs, however, reflected a still-jittery market, with the SPDR Gold Trust increasing its holdings to 1,217.295 tons on Monday after hitting a 9-month low on Thursday at 1,210.621 tons.
April Brent crude dropped more than $1 per barrel on the news, to $113.75; that’s down more than $6 from Feb. 24, when it hit $119.79. The February price was its highest since 2008, when it set a new record of $147.50.
Saudi Arabia, which has most of the spare capacity possessed by OPEC, is already pumping nearly a million barrels per day above its normal quota, producing approximately 9 million barrels per day.