Gold and Silver Outperform After Weak Holiday Sales Report

On Wednesday, gold (NYSEARCA:GLD) futures for February delivery, the most active contract, increased $1.20 to settle at $1,660.70 per ounce, while silver (NYSEARCA:SLV) futures for March edged 14 cents higher to close at $30.04.

Both precious metals outperformed the major U.S. stock indices as the dollar edged lower with weaker-than-expected holiday sales. According to MasterCard Advisors SpendingPulse, a report that tracks spending on popular holiday items, sales in the two months before Christmas increased only 0.7 percent, compared to a 2.0 percent gain last year. Several analysts were expecting holiday sales to increase around 3 to 4 percent. It was the worst reading since 2008, when sales dropped between 2 percent and 4 percent.

Meanwhile, a fiscal cliff deal has yet to be reached by the two political parties in Washington. Congress returns from holiday vacation on Thursday, only a few days before the country experiences tax increases and spending cuts that are expected to spark another recession. “There’s still a chance for them to get a deal,” said Ron Bonjean, a Republican strategist, according to Bloomberg. However, he adds, “It grows more unlikely by the day, and there’s not a lot of days left.”

By the end of the day, the SPDR Gold Trust (NYSEARCA:GLD) edged 0.10 percent higher, while the iShares Silver Trust (NYSEARCA:SLV) increased 0.24 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) both jumped about 1.0 percent. Meanwhile, Endeavour Silver (NYSE:EXK) and Coeur d’Alene Mines (NYSE:CDE) gained 1.94 percent and 1.26 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS