Gold and Silver Edge Lower as Spainish Yields Rise

On Monday, gold (NYSEARCA:GLD) futures for June delivery fell $10.50 to settle at $1,649.70 per ounce, while silver (NYSEARCA:SLV) futures edged 2 cents lower to close at $31.37. It was gold’s lowest close in a week.

Despite more euro zone concerns and a weaker U.S. dollar (NYSE:UUP), precious metals were unable to stage a rally. Fears about a weakening Spanish economy and its ability to finance its debt pushed the yield on the Spanish 10-year bond above 6 percent. It is the highest level on the 10-year bond since the European Central Bank launched its first Long Term Refinancing Operation last year. Concerns also spilled over into Italy, where bond yields increased to 5.65 percent. “If the price action is any indicator, Spain will find itself under more pressure over the next few weeks,” explained a debt trader in London, according to the WSJ.

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The euro briefly fell below $1.30, its lowest level since January, but rebounded to as high as $1.314. Meanwhile, the U.S. dollar sank to $79.50. Spain, the euro zone’s fourth largest economy, is scheduled to sell bonds at an auction this Thursday. The sale will be closely watched as any weakness in the auction will spark more insolvency fears.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined .32 percent, while the iShares Silver Trust (NYSEARCA:SLV) traded flat. Gold miners (NYSEARCA:GDX) underperformed bullion with Yamana Gold (NYSE:AUY) and Barrick Gold (NYSE:ABX) both falling 1.7 percent. Silver investments such as Silver Wheaton Corp. (NYSE:SLW) and Endeavour Silver (NYSE:EXK) dropped 5.10 percent and 3.3 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS