Precious metals’ are falling along with other asset prices Monday morning, U.S. Treasury securities being a notable exception, as doubts and anxiety over the European Union’s new treaty have emerged. Spot gold was down some 2.7% at 11:20 a.m., with a bid price of $1,665.70 and an ask price of 1,665.80, having traded as high as $1,678.40 and as low as $1,655.70. The London afternoon reference price fix came in at $1,659.50, according to Kitco market data.
Spot silver was down around 3.25%, bid at $31.18 with an ask price of $31.28. The morning high as of time of writing was $31.35, and the low was $30.78. Monday’s reference price was set at $31.22 in the London a.m.
One gold bullion dealer in Hong Kong noted rumors over the weekend of stop losses set just below $1,700, all of which were cleared out “within seconds” this morning. “We expect physical demand to return in some strength on approach of $1,650,” Standard Bank commodities strategist Walter de Wet was quoted in a report from BullionVault. “Key support for the metal lies at its 200-day moving average at $1,617. Since early 2009, gold has consistently bounced off its 200-day moving average. Unless funding issues in Europe deteriorate substantially. . .we expect this support to hold.”
Unsettling market participants, Moody’s put the debt of all European Union countries under review. In recent days, it’s downgraded the long-term debt of leading European banks including Societe Generale, BNP Paribas and Credit Agricole. Prices on key Italian and Spanish government bonds have been falling, and yields rising, for four of the last five trading days, according to a Bloomberg news report. In contrast, prices of German bunds and U.S. Treasuries strengthened. The widening spread between the two groups is indicative of the perceived risk bond market investors are placing on the respective credit of the four nations.
The indirect bid on last week’s auction of 4-week T-bills was five to 10 times normal, while primary dealers were aggressively bidding to purchase as much of the issue as possible, notes Lee Adler on Minyanville. Moreover, he writes, withholding tax collections continue to be weaker than expected, forcing the government to increase the size of Treasury auctions.
Foreign bank primary dealers, seven of them European, make up one-third of U.S. primary dealers, and the strong primary dealer bid in the 4-week auction shows their interest in parking the extra liquidity being injected into the eurozone monetary system in a safe haven. Gold and silver aren’t participating in the flight to quality, however. They’re trading pretty much in sync with stocks and the dollar.
Turning to stock exchange trading, gold and silver trusts were heading south.
- The SPDR Gold Trust (NYSE:GLD) was showing losses of around 2.6%.
- The iShares Gold Trust (NYSE:IAU) was down around 2.5%.
- The iShares Silver Trust (NYSE:SLV) was moving lower, down 3%.
Gold and silver mining ETFs were falling sharply.
- The Market Vectors Gold Miners ETF (NYSE:GDX) was moving lower, down more than 3.8%.
- The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was down around 4.25%.
- The Global X Silver Miners ETF (NYSE:SIL) was down some 4.3%.
Gold mining shares were all showing steep losses, with NovaGold Resources off more than 6%.
- Agnico-Eagle Mines (NYSE:AEM) was showing losses of nearly 4%.
- Barrick Gold (NYSE:ABX) was down between 3.6% and 3.7%.
- Goldcorp (NYSE:GG) was showing losses of around 4.6%.
- Newmont Mining (NYSE:NEM) was around 2.4% lower.
- NovaGold Resources (AMEX:NG) was nearly 6.2% lower.
Silver mining shares were getting hammered.
- Coeur d’Alene Mines (NYSE:CDE) was moving down sharply, off more than 6%.
- Hecla Mining (NYSE:HL) was down more than 5.2%.
- Pan American Silver (NASDAQ:PAAS) was down more than 4.5%.
- Silver Wheaton (NYSE:SLW) was showing losses of around 5.5%.
- Silver Standard Resources (NASDAQ:SSRI) was dropping, down around 5%.
As of this writing, Andrew Burger did not own a share in any of the aforementioned stocks. Adrian Ash of BullionVault contributed to this report.