Gold & Silver Decline on Downbeat World Bank Outlook
Both precious metal declined as the World Bank reduced its economic growth forecasts for the East Asia and Pacific region. It also warned that China’s slowdown could worsen and drop the nation’s growth to an estimated 11-year low. Growth in developing East Asia is expected to decline to 7.2 percent in 2011, down from an estimated 7.6 percent in May. The U.S. dollar index climbed higher on the downbeat news, reaching as high as 79.71 in the morning hours.
“Economic projections for EAP (East Asia and Pacific) are surrounded by considerable uncertainties, and a variety of risks continue to loom over the global and regional economy,” the World Bank said. “Although recent policy moves have reduced the risk stemming from the eurozone, financial market disruptions still constitute the main risk to this outlook, followed by the ‘fiscal cliff’ risk in the United States.”
In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) edged 0.35 percent lower, while the iShares Silver Trust (NYSEARCA:SLV) dropped 1.5 percent. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Newmont Mining (NYSE:NEM) both traded flat. Meanwhile, silver names such as Silver Wheaton (NYSE:SLW) and Hecla Mining (NYSE:HL) declined 0.75 percent and 0.20 percent, respectively.
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Disclosure: Long EXK, AG, HL, PHYS