Gold and Silver Rest and Take a Deep Breathe

On Monday, gold (NYSEARCA:GLD) futures for August delivery fell $6.50 to settle at $1,597.70 per ounce, while silver (NYSEARCA:SLV) futures edged 11 cents lower to close at $27.50.

Both precious metals took a breather today, following a large surge on Friday after European leaders at a summit in Brussels agreed on plans to create a single supervisor and stabilize the region’s debt markets by recapitalizing its banks. However, gold and silver may be receiving support as the latest U.S. manufacturing report sparks more slowdown fears and stimulus chatter.

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The Institute for Supply Management reported its index of manufacturing activity declined to 49.7 last month, down from 53.5 in May. It was the first time in two years that the index contracted. A reading below 50 indicates contraction, while a reading above 50 signals expansion. “The U.S. is catching the slowdown already under way in Europe and China,” said Paul Dales, senior U.S. economist at Capital Economics. “Overseas events appear to be prompting American firms to put orders on hold until the outlook is clearer.”

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 0.17 percent, while the iShares Silver Trust (NYSEARCA:SLV) gained 0.26 percent. Yamana Gold (NYSE:AUY) traded relatively flat, but Newmont Mining (NYSE:NEM) fell almost 1 percent. Silver names such as Silver Wheaton Corp. (NYSE:SLW) and Hecla Mining Co. (NYSE:HL) gained 0.30 percent and 0.21 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS