Fed, Economic Data Drive Gold, Silver Lower

by Andrew Burger | June 21, 2012 1:24 pm

Fed, Economic Data Drive Gold, Silver Lower

PreciousMetalsRecap Fed, Economic Data Drive Gold, Silver Lower[1]Gold and silver were sharply lower Thursday morning amid weak economic data and the Fed’s decision to refrain from doing anything more[2] in the way of monetary easing than extending its “Operation Twist” open market operations.

Spot gold was 2.02% lower as of 12:01 p.m., bid well below $1,600 an ounce at $1,574.40. The morning high reached $1,593.80, with the low at 1,565.80, according to Kitco market data[3]. The London afternoon reference price was fixed at $1,582, $19 an ounce higher than Wednesday’s price fixing.

Spot silver was moving sharply lower as well, down 3.2% and bid at $27.72. The day’s high thus far was $27.84 and the low $26.89. The London a.m. reference price was fixed at $27.88, 43 cents lower than Wednesday’s reference price.

Seasonally adjusted weekly claims for state unemployment insurance benefits decreased by 2,000[4], to 387,000. The less volatile four-week moving average rose 3,500, to 386,250, its highest level since December, the Labor Dept. reported. Markit’s Flash Purchasing Managers Index for the U.S. fell to 52.9 in June from 54 in May, its lowest since last July.

May existing-home sales decreased to a 4.55 million[5] annual rate, down 1.5% from April, according to the National Association of Realtors.

The European Commission reported that its monthly composite Purchasing Managers Index[6] (PMI) for the eurozone was unchanged at 46, its lowest since June 2009 and below the 50 level that indicates economic expansion.

Gold bullion continued to move lower in London morning trading[7] Thursday, hitting an eight-session low of $1,587 an ounce and down 2.5% on the week to date, BullionVault reported.

“Achieving a durable and prompt exit from the euro-area crisis, as well as avoiding the US ‘fiscal cliff’ [due start-2013] is crucial for sustained global recovery,” BullionVault paraphrased a new report from the International Monetary Fund on the outlook for the G20 group of large economies. An eighth consecutive decline in HSBC’s preliminary “flash” estimate of China’s PMI also weighed on markets.

Gold and silver trusts were showing sharp losses Thursday morning.

Gold and silver mining ETFs were down sharply.

Gold mining shares were also showing sharp morning losses.

Silver mining shares were sustaining sharp losses as well.

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.

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/10/PreciousMetalsRecap.gif
  2. Fed’s decision to refrain from doing anything more: http://investorplace.com/2012/06/why-the-fed-held-back-on-qe3/
  3. Kitco market data: http://www.kitco.com/market/
  4. decreased by 2,000: http://www.reuters.com/article/2012/06/21/us-usa-economy-jobs-idUSBRE85K0S920120621
  5. decreased to a 4.55 million: http://www.bloomberg.com/news/2012-06-21/sales-of-existing-u-s-homes-fell-in-may-to-4-55-million-rate.html
  6. composite Purchasing Managers Index: http://online.wsj.com/article/SB10001424052702304898704577479911845793708.html?mod=googlenews_wsj
  7. London morning trading: http://goldnews.bullionvault.com/gold-price-062120124
  8. GLD: http://studio-5.financialcontent.com/investplace/quote?Symbol=GLD
  9. IAU: http://studio-5.financialcontent.com/investplace/quote?Symbol=IAU
  10. SLV: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLV
  11. GDX: http://studio-5.financialcontent.com/investplace/quote?Symbol=GDX
  12. GDXJ: http://studio-5.financialcontent.com/investplace/quote?Symbol=GDXJ
  13. SIL: http://studio-5.financialcontent.com/investplace/quote?Symbol=SIL
  14. AEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=AEM
  15. ABX: http://studio-5.financialcontent.com/investplace/quote?Symbol=ABX
  16. EGO: http://studio-5.financialcontent.com/investplace/quote?Symbol=EGO
  17. GG: http://studio-5.financialcontent.com/investplace/quote?Symbol=GG
  18. KGC: http://studio-5.financialcontent.com/investplace/quote?Symbol=KGC
  19. NEM: http://studio-5.financialcontent.com/investplace/quote?Symbol=NEM
  20. NG: http://studio-5.financialcontent.com/investplace/quote?Symbol=NG
  21. AUY: http://studio-5.financialcontent.com/investplace/quote?Symbol=AUY
  22. CDE: http://studio-5.financialcontent.com/investplace/quote?Symbol=CDE
  23. HL: http://studio-5.financialcontent.com/investplace/quote?Symbol=HL
  24. PAAS: http://studio-5.financialcontent.com/investplace/quote?Symbol=PAAS
  25. SLW: http://studio-5.financialcontent.com/investplace/quote?Symbol=SLW
  26. SSRI: http://studio-5.financialcontent.com/investplace/quote?Symbol=SSRI

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