Gold and Silver Decline as ECB Action is a No-Show
Both precious metals suffered as European Central Bank president Mario Draghi failed to deliver concrete plans as Wall Street had expected. Despite pledging last week that the central bank would do “whatever it takes” to save the euro, he offered no actual steps and said the ECB “may undertake outright open market operations of a size adequate to reach its objective.”
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Furthermore, the ECB kept its benchmark interest rate unchanged at 0.75 percent. Although no new plans were revealed for the eurozone, some believe there is something being prepared. “I’m convinced that there’s concerted action being prepared in the background,” said Stephan Rieke, an economist at BHF-Bank AG, according to Bloomberg. “But we’re all treading in the dark and Draghi isn’t much ahead either. He’s presented a target, given strong guidance, and now we’ll have to see.” However, investors were not pleased with Draghi’s comments and fled to the U.S. dollar.
In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 0.68 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell 0.87 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) traded flat, while Silver Wheaton (NYSE:SLW) and First Majestic Silver (NYSE:AG) gained nearly 1 percent.
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Disclosure: Long EXK, AG, HL, PHYS