Gold, Silver Lower on Euro Debt Concerns

Gold was down 1% and silver down nearly 1.5% in Friday morning trading, as eurozone sovereign debt concerns, rumors of S&P credit downgrades and JPMorgan‘s (NYSE:JPM) disappointing earnings report overwhelmed a higher-than-expected reading of U.S. consumer sentiment.

Spot gold was trading about 1% lower at 11 a.m., with a bid price of $1,632.40 per ounce and an ask price of $1,633.40. Spot gold traded as high as $1,643.50 and as low as $1,624.20. The London afternoon reference price fix came in at $1,635.50, $25.50 per ounce lower than Thursday’s reference price, according to Kitco market data.

Spot silver was down 1.45%, bid at $29.81 per ounce with an ask price of $29.91. The morning high as of time of writing was $30.01 and the low was $29.36. Friday’s reference price was set at $29.64 in the London a.m., 94 cents per ounce lower than yesterday’s price fix.

Rumors that Standard & Poor’s is going to downgrade government debt of several eurozone countries sent all risk assets downward despite news that the Thomson Reuters/University of Michigan consumer sentiment index rose to 74 in January, its highest level since May. A negative for gold and silver in particular, the euro weakened against the dollar. The yield on new Italian three-year bonds fell below 5% for the first time since September, but the Italian treasury was only able to sell half the 10 billion euros Spain sold yesterday at far lower yields than Italy promised to pay investors today.

Gold prices hit a low of $1,637 per ounce in London morning trading Friday, 1.4% off Thursday’s high, though the gold price in euros gained throughout morning trading, hitting 1,285 euros per ounce, BullionVault reported in its London Gold Market Report. “We feel the market is once again comfortable with gold,” ScotiaMocatta wrote in its latest technical analysis report, “but will liquidate on a break of $1,605.”

Gold prices were up 1.5% heading into the weekend and up 4.7% over the last two weeks based on London p.m. fix prices. This would mark gold’s biggest two-week gain since the two-week period ended Nov. 4, according to BullionVault‘s Adrian Ash.

Gold and silver trusts were showing losses in Friday morning activity on U.S. exchanges.

  • The SPDR Gold Trust (NYSE:GLD) was showing losses of more than 0.9%.
  • The iShares Gold Trust (NYSE:IAU) was down nearly 0.9%.
  • The iShares Silver Trust (NYSE:SLV) was down more than 1%.

Gold and silver mining ETFs also were moving sharply lower.

  • The Market Vectors Gold Miners ETF (NYSE:GDX) was showing losses of around 1.9%.
  • The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) was down 2.2%.
  • The Global X Silver Miners ETF (NYSE:SIL) was down more than 1.6%.

Gold mining shares were showing sharp losses for the most part as well.

  • Agnico-Eagle Mines (NYSE:AEM) was showing losses of around 3%.
  • Barrick Gold (NYSE:ABX) was down more than 2%.
  • Eldorado Gold (NYSE:EGO) was down more than 2%.
  • Goldcorp (NYSE:GG) was up 1.35%.
  • Newmont Mining (NYSE:NEM) was up just shy of 0.8%.
  • NovaGold Resources (AMEX:NG) was down nearly 1.4%.
  • Yamana Gold (NYSE:AUY) was down more than 0.4%.

Silver mining shares also were showing mostly steep losses.

  • Coeur d’Alene Mines (NYSE:CDE) was moving lower, down nearly 1.9%.
  • Hecla Mining (NYSE:HL) was down around 2.5%.
  • Pan American Silver (NASDAQ:PAAS) was down some 0.7%.
  • Silver Wheaton (NYSE:SLW) was showing losses of 1.5%.
  • Silver Standard Resources (NASDAQ:SSRI) was down around 3.4%.

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.

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