On Friday, gold (NYSEARCA:GLD) futures for December — the most active contract — dropped $28.70 to close at $1,268.20 per ounce, while silver (NYSEARCA:SLV) futures fell 64 cents to finish at $21.26. Major exchanged-traded funds, like the SPDR Gold Trust and the iShares Silver Trust, also closed lower.
Precious metals continued to struggle and posted losses for the week as politicians actually made some progress on the fiscal standoff. After meeting with President Obama late Thursday, House Republicans have offered a new plan to extend the nation’s debt ceiling for six week and end the partial government shutdown that began at the beginning of October.
The deal is conditioned on the president negotiating over spending cuts, but investors appear to be giving Capitol Hill the benefit of the doubt. “Investors have happily noted the shift in negotiating parlance by diving head first back into riskier asset pools,” said Christopher Vecchio, currency analyst at DailyFX. However, he also notes, “U.S. fiscal headlines will continue to rattle markets and there of course remains the seemingly diminishing possibility that no deal emerges.”
Stocks rallied across the board on Friday. The Dow Jones Industrial Average jumped more than 100 points, while the S&P 500 closed back above 1,700 for the first time this month. In contrast, shares of the SPDR Gold Trust (NYSEARCA:GLD) fell 1.3 percent, while the iShares Silver Trust (NYSEARCA:SLV) declined 1.4 percent. Gold miners (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) dropped 3.4 percent and 2.6 percent, respectively.
Furthermore, gold experienced another wave of heavy selling in the futures market, which trigged a halt for ten seconds. “It appears to have been an order to sell 5,000 gold futures contracts at market,” Eric Hunsader of Nanex told CNBC. “About 2,700 went off and tripped the stop logic, halting gold futures for 10 seconds while liquidity replenished. When enough liquidity returned, the balance of about 2,300 completed.”
Nearly one month ago to the day, approximately 2,000 gold futures contracts traded in one second and caused a circuit breaker to halt electronic trading on the Globex for 20 seconds. It was the longest halt that Nanex — creator of technology that powers the delivery of market data — has ever seen in a widely traded futures contract.
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Disclosure: Long EXK, AG, HL, PHYSRead the original article from Wall St. Cheat Sheet
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