Gold, Silver Higher on Fed Stance, Eurozone Weakness

by Andrew Burger | April 26, 2012 12:42 pm

Gold and silver were showing healthy gains Thursday morning following supportive statements on Wednesday from Fed Chairman Bernanke, further signs of economic weakness in the eurozone and a strong earnings season. Spot gold was up 0.78%, bid at 1,657.10 as of 10:52 a.m., having traded as high as $1,660 and as low as $1,647.80 an ounce, according to Kitco market data[1]. The London afternoon reference price was set at $1,653.50, $15.75 an ounce higher than Wednesday’s afternoon price.

Spot silver was showing a 1.14% gain, bid at $31.06. The morning high as of time of writing was $31.20, and the low was $30.59. Thursday’s reference price was set at $30.70 an ounce in the London a.m., 18 cents below Wednesday’s price fix.

Seasonally adjusted initial claims for unemployment[2] insurance were essentially unchanged last week, worse than consensus expectations, the Labor Dept. reported. At 388,000, initial unemployment claims remain near their highest level of the year. The less volatile four-week moving average climbed 6,250 to 381,750.

With the Fed standing ready to enact additional bond purchases to keep long-term interest rates low, Chairman Bernanke warned[3] Congress and the president that failing to extend some expiring tax cuts could send the U.S. economy off a “fiscal cliff.”

The Chicago Fed’s National Activity Index[4] (CFNAI) fell to -0.29 in March from +0.07 in February, with all four broad index categories registering deterioration. The production, income, personal consumption and housing categories all subtracted from the reading.

The European Union (EU) Economic Sentiment Indicator[5] (ESI) held steady in April at 93.2, while the euro area ESI fell 1.7% to 92.8, offsetting the index’s 1Q gains. Weakening confidence in the industry and service sectors drove the decline, the European Commission reported.

The EU Business Climate Index[6] dropped 0.24 points to -0.52 in April, the EC reported, on “a more negative assessment of export order books, production expectations, past production and orders books.”

Gold bullion prices hovered around $1,650 an ounce in London morning trading Thursday, about where they began the week, according to BullionVault’s London Gold Market[7] report.

“Trend line support [for gold bullion ] is seen at $1,627 on the weekly chart,” BullionVault quoted the latest technical analysis from Scotia Mocatta. “A close below this level on Friday will bring in liquidation selling of stale long gold positions.”

In U.S. stock exchange trading, gold and silver trusts were moving higher as well.

• The SPDR Gold Trust (NYSE:GLD[8]) was up some 0.85%.
• The iShares Gold Trust (NYSE:IAU[9]) was up around 0.85%.
• The iShares Silver Trust (NYSE:SLV[10]) was more than 0.9% higher.

Gold- and silver-mining ETFs were also heading higher.

• The Market Vectors Gold Miners ETF (NYSE:GDX[11]) was showing small gains of around 0.1%.
• The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ[12]) was up around 1%.
• The Global X Silver Miners ETF (NYSE:SIL[13]) was around 0.5% higher.

Gold-mining shares were mixed, with Goldcorp getting hit hard.

• Agnico-Eagle Mines (NYSE:AEM[14]) was showing gains of some 2.3%.
  
• Barrick Gold (NYSE:ABX[15]) was up nearly 0.3%.
  
• Eldorado Gold (NYSE:EGO[16]) was up around 1.7%.
  
• Goldcorp (NYSE:GG[17]) was dropping hard and fast, down more than 5.3%.
  
• Kinross Gold Corp. USA (NYSE:KGC[18]) was some 0.1% lower.
  
• Newmont Mining (NYSE:NEM[19]) was down around 0.1%.
  
• NovaGold Resources (NYSEAMEX:NG[20]) was nearly 1% lower.
  
• Yamana Gold (USA) (NYSE:AUY[21]) was up around 0.25%.

Silver-mining shares were moving higher.

• Coeur d’Alene Mines (NYSE:CDE[22]) was around the unchanged level.
  
• Hecla Mining (NYSE:HL[23]) was 1.9% higher.
  
• Pan American Silver (NASDAQ:PAAS[24]) was showing gains about 1.7%.
  
• Silver Wheaton (NYSE:SLW[25]) was up around 1.6%.
  
• Silver Standard Resources (NASDAQ:SSRI[26]) was up some 0.4%.

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.

Source URL: https://investorplace.com/2012/04/gold-silver-higher-on-fed-stance-eurozone-weakness/

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