Gold and Silver Ignore Inflation Outlook

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On Wednesday, gold (NYSEARCA:GLD) futures for April delivery, the most active contract, fell $4.50 to settle at $1,645.10 per ounce, while silver (NYSEARCA:SLV) futures for March dropped 15 cents to close at $30.87.

Both precious metals remain stuck in consolidation mode, despite an outlook from the United Kingdom saying inflation will remain above the 2 percent target rate for the next two years. Bank of England Governor Mervyn King also warned that tightening monetary policy was not the answer for economic woes.

He explains, “We do need to get back to normal interest rates, but if we were to try to get back today or this year, we would simply turn the economy into a deeper recession. And trying to reconcile those two positions is the challenge of the paradox of policy and it’s proving exceptionally difficult and I don’t have an easy answer to it.”

By the end of the trading day, the SPDR Gold Trust (NYSEARCA:GLD) closed 0.53 percent lower, while the iShares Silver Trust (NYSEARCA:SLV) dropped 1.06 percent. Barrick Gold (NYSE:ABX) closed nearly 3 percent in the red, while Freeport-McMoRan Copper & Gold (NYSE:FCX) finished the day flat. Silver names such as Hecla Mining (NYSE:HL) and Endeavour Silver (NYSE:EXK) both fell more than 1 percent.

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Disclosure: Long EXK, AG, HL, PHYS

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