Gold and Silver Drop to Mid-January Levels

On Thursday, gold (NYSEARCA:GLD) futures for April delivery declined $7.80 to settle at $1,642.50 per ounce, while silver (NYSEARCA:SLV) futures fell 88 cents to close at $31.35.

Both precious metals closed at their lowest level since mid-January as the U.S. dollar (NYSE:UUP) climbed higher.  A preliminary gauge of Chinese manufacturing weighed on markets as it decreased in March.  The HSBC flash Purchasing Managers Index dropped to 48.1 in March, a four month low.  In comparison, February had a reading of 49.6.  A reading below 50 indicates a contraction in the economy.

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“Growth momentum could slow down further amid a combination of sluggish export new orders and softening domestic demand, and this calls for further easing steps,” said Qu Hongbin, Hong Kong-based chief economist for China at HSBC.

Although more easing will be positive for gold and silver in the long-run, the metals experienced a broad pullback today.  In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) dipped .40 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped 2.4 percent.  Gold miners (NYSEARCA:GDX) such as AngloGold (NYSE:AU) and Yamana Gold (NYSE:AUY) fell more than 2 percent, while Goldcorp Inc. (NYSE:GG) decreased .77 percent.  Silver miners (NYSEARCA:SIL) such as Fortuna Silver (NYSE:FSM) and Silvercorp Metals Inc. (NYSE:SVM) also declined more than 2 percent.

Shares of Randgold Resources (NASDAQ:GOLD) were punished 12 percent after reports of renegade soldiers overthrowing a democratically elected government of Mali, where the miner operates.  However, Randgold claims its operations were unaffected.  “Operations are running normally, people are at work,” Randgold CEO Mark Bristow explained.

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Disclosure: Long EXK, AG, HL, PHYS

To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com