Gold and silver were both backtracking after making recent gains Thursday morning as China’s central bank unexpectedly cut its benchmark bank interest rates and markets absorbed Fed Chairman Bernanke’s testimony before a congressional committee. Mining shares were down sharply as expectations of additional central bank monetary easing seem to be fading.
Spot gold was 0.94% lower as of 11:01 a.m., bid at $1,604.40. The morning high reached $1,629.50, and was as low as $1,599.20, according to Kitco market data. The London afternoon reference price was fixed at $1,606, $29 an ounce lower than Wednesday’s fixed price.
Spot silver was showing a sharp, 2.04% loss, bid at $28.83 an ounce. The morning high as of time of writing was $29.79, with the low reaching $28.59. Thursday’s reference price fix of $29.28 is 8 cents below Wednesday’s reference price.
Seasonally adjusted weekly claims for unemployment insurance dropped by 12,000 to 377,000 in the week ended June 2. The previous week’s figure was revised upwards to 389,000, the Labor Dept. reported. The less volatile four-week moving average rose to 377,750, the highest in a month, from 376,000.
China’s central bank surprised markets by cutting its benchmark bank lending and deposit interest rates 25 basis points. The People Bank of China’s rate cut heightens speculation that major central banks will act separately or in coordination to avoid the onset of another global recession. In his comments today, Bernanke said the Fed stood ready to act if need be, but he gave no hint as to when or how that might happen.
Spain’s borrowing costs rose, and France’s fell at auctions carried out today. Spain sold a total of €2.074 billion of new 3.3% two-year and 4.25% four-year notes, and 5.85% 10-year bonds, slightly above the top of end of what had been allocated. Yields on Spanish two-year and four-year notes fell 10-15 bps following the auction, while 10-year bond yields also fell.
France sold €7.86 billion of long-term bonds maturing in April 2019, 2022, 2026 and 2060, near the upper end of its target range. Auction yields decreased, with the benchmark 10-year bond yield falling 50 bps from the previous auction in May.
Gold bullion reached $1,628 an ounce as the euro strengthened, reaching $1.26 for the first time in a week, BullionVault reported. “Gold’s performance over the past month has not been positive but has been the best of the bad bunch,” BullionVault quoted Standard Bank’s Walter de Wet.
“However, movements in the US Dollar [are] only a short-term driver of gold prices… As a result, we believe that turning structurally bearish on gold purely because of a stronger dollar (or weaker euro) would be wrong [and] continue to look for a gold price above $1900 in Q4.”
Gold and silver trusts were sharply lower in U.S. stock exchange trading.
- The SPDR Gold Trust (NYSE:GLD) was showing losses of around 1.45%.
- The iShares Gold Trust (NYSE:IAU) was down around 1.45%.
- The iShares Silver Trust (NYSE:SLV) was sharply lower, down around 2.4%.
Gold- and silver-mining ETFs were sharply lower as well.
- The Market Vectors Gold Miners ETF (NYSE:GDX) was around 4% lower.
- The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was around 4% lower.
- The Global X Silver Miners ETF (NYSE:SIL) was down around 2.4%.
Gold-mining shares were also seeing strong selling pressure.
- Agnico-Eagle Mines (NYSE:AEM) was down around 3.9%.
- Barrick Gold (NYSE:ABX) was around 5.35% lower.
- Eldorado Gold (NYSE:EGO) was down some 3.9%.
- Goldcorp (NYSE:GG) was around 4.25% lower.
- Kinross Gold Corp. USA (NYSE:KGC) was down more than 5.3%.
- Newmont Mining (NYSE:NEM) was showing losses of around 3.1%.
- NovaGold Resources (NYSEAMEX:NG) was down more than 4.7%.
- Yamana Gold (USA) (NYSE:AUY) was around 4.2% lower.
Silver-mining shares were showing sharp losses.
- Coeur d’Alene Mines (NYSE:CDE) was down around 1.3%.
- Hecla Mining (NYSE:HL) was around 4.3% lower.
- Pan American Silver (NASDAQ:PAAS) was down some 3.2%.
- Silver Wheaton (NYSE:SLW) was around 3.45% lower.
- Silver Standard Resources (NASDAQ:SSRI) was down more than 4.3%.
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.