Gold and silver prices were volatile and sharply lower Wednesday morning as Federal Chairman Ben Bernanke was testifying before Congress. Also impacting gold and silver trading, the European Central Bank conducted its second Long Term Refinancing Operation, and the Bureau of Economic Analysis revised fourth-quarter 2011 GDP upward.
Spot gold was down 2.78% at 11 a.m., having traded as high as $1,788 and as low as $1,718.10. The London morning reference price was fixed at $1,788, $7 per ounce higher than Tuesday’s afternoon reference price, according to Kitco market data.
Spot silver was showing a 2.79% loss, bid at $35.90 with an ask price of $36. The morning high as of time of writing was $37.62 and the low was $35.38. Wednesday’s reference price was set at $37.23 in the London a.m., a full $1.63 cents per ounce above Tuesday’s reference price.
The Bureau of Economic Analysis revised its Q4 GDP estimate to 3% from an initial 3.8% last month. The U.S. economy grew at a 1.8% rate in Q3 2011, according to the BEA.
European banks tapped the European Central Bank for 529.5 billion euros ($712.4 billion) in low-cost, three-year loans in the second round of the ECB’s Long-Term Refinancing Operation. Looking to avoid another credit crunch, the three-year funding comes with interest rates as low as 1%.
The 500 million euros ($672.5 billion) of liquidity added in the first-round LTRO operation has successfully alleviated tightening in the interbank money market, and it has shored up euro government bond markets. It’s also been a key factor in the recent run-up in gold and silver prices.
The price of gold bullion was holding steady around $1,785 an ounce in London morning trading Wednesday, according to BullionVault’s London Gold Market report. At $37.36 an ounce, Wednesday’s LME afternoon price fix for gold was 10.8% higher than a month ago, BullionVault’s Adrian Ash noted. Gold reached $1,790 in Asian trading Wednesday for the first time since November.
Turning to U.S. stock exchange trading, gold and silver trusts were showing sharp losses.
- The SPDR Gold Trust (NYSE:GLD) was moving lower, down around 2.95%.
- The iShares Gold Trust (NYSE:IAU) was showing losses of more than 2.9%.
- The iShares Silver Trust (NYSE:SLV) was down between 2.3% and 2.6%.
Gold and silver mining ETFs also were moving down sharply.
- The Market Vectors Gold Miners ETF (NYSE:GDX) was down more than 2.6%.
- The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was losses of around 3.5%.
- The Global X Silver Miners ETF (NYSE:SIL) was down some 1.4%.
Gold mining shares were showing steep losses across the board.
- Agnico-Eagle Mines (NYSE:AEM) was showing losses of around 1.9%.
- Barrick Gold (NYSE:ABX) was down around 2.25%.
- Eldorado Gold (NYSE:EGO) was down around 2.15%.
- Goldcorp (NYSE:GG) was around 2% lower.
- Kinross Gold (NYSE:KGC) was down more than 1.9%.
- Newmont Mining (NYSE:NEM) was down nearly 3.4%.
- NovaGold Resources (AMEX:NG) was nearly 4% lower.
- Yamana Gold (NYSE:AUY) was down around 3%.
Silver mining shares also were showing large losses.
- Coeur d’Alene Mines (NYSE:CDE) was moving lower, down more than 4%.
- Hecla Mining (NYSE:HL) was down more than 3.5%.
- Pan American Silver (NASDAQ:PAAS) was showing losses of around 2.75%.
- Silver Wheaton (NYSE:SLW) was down more than 4%.
- Silver Standard Resources (NASDAQ:SSRI) was more than 2.8% lower.
As of this writing, Andrew Burger did not hold a position in any of the aforementioned securities. Adrian Ash of BullionVault contributed to this report.