Gold and Silver Remain in Consolidation Mode

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By Eric McWhinnie | October 10, 2012 6:23 AM EST

Wall St. Cheat Sheet

On Tuesday, gold (NYSEARCA:GLD) futures for December delivery fell $10.70 to settle at $1,765 per ounce, while silver (NYSEARCA:SLV) edged 3 cents lower to close at $33.99.

Both precious metals remained in their recent consolidation phrase, despite China’s central bank providing more liquidity to its economy. The People’s Bank of China used reverse repurchases agreements, also known as reverse repos, to inject 265 billion yuan ($42.14 billion) into the money market on Tuesday. More than 2.4 trillion yuan has been injected since June.

“The central bank seems to be scrambling to bring money-market rates down in order to support growth,” said Dariusz Kowalczyk, a senior economist at Crédit Agricole CIB, according to the WSJ. “The large open-market operation shows a pro-growth policy bias and should thus be positive for market sentiment.”

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In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 0.50 percent, while the iShares Silver Trust (NYSEARCA:SLV) only declined 0.20 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) both dropped more than 1 percent. Silver names such as First Majestic Silver (NYSE:AG) and Hecla Mining (NYSE:HL) declined 0.55 percent and 0.30 percent, respectively.

Shares of Endeavour Silver (NYSE:EXK) declined on news of an illegal work stoppage near its El Cubo mine located in the state of Guanajuato, Mexico. It is preventing company management and personnel from accessing certain facilities held under lease.

In a press release, Endeavour explains, “No formal complaints have been made against Endeavour or its subsidiaries and no strike notice has been filed so the work stoppage is illegal. Endeavour has contacted the Mexican government authorities and taken all the legal steps necessary to declare the stoppage illegal and cease the blockade. El Cubo mine operations have not been interrupted and union workers continue to produce and stockpile ore as usual. Endeavour’s wholly owned El Cubo leach plant has been unaffected by the work stoppage thus far but will run out of concentrates from the Las Torres plant soon.”

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Disclosure: Long EXK, AG, HL, PHYS

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The article was first published by Wall St. Cheat Sheet and does not represent the views or opinions of International Business Times.

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