Both precious metals declined as the U.S. dollar index climbed higher. More negative news regarding Spain sent investors running into the greenback. Moody’s downgraded five of the country’s regions, including Catalonia, which accounts for a fifth of Spain’s economic output. Furthermore, the Bank of Spain announced that Spain’s economy shrank for a fifth consecutive quarter. The country’s gross domestic product declined to 0.4 percent in the three months through September.
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“Progress isn’t conclusive, there is a huge amount of uncertainty in Spain right now,” said Ebrahim Rhbari, a London- based economist at Citigroup, according to Bloomberg. “There are question marks about the banking sector and public finances and economic fundamentals suggest we will see a bailout sooner than later.” In mid-day trading, the dollar index hit as high as 80.06.
By the end of the trading day, the SPDR Gold Trust (NYSEARCA:GLD) closed 1.29 percent in the red, while the iShares Silver Trust (NYSEARCA:SLV) declined 2.26 percent. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Freeport-McMoRan Copper & Gold (NYSE:FCX) dropped nearly 4 percent. Silver names such as Endeavour Silver (NYSE:EXK) and First Majestic Silver (NYSE:AG) declined 3.56 percent and 4.23 percent, respectively.
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Disclosure: Long EXK, AG, HL, PHYS
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