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Early Monday, gold climbed to a three-week high before giving up gains. Gold and silver both turned in strong performances last week as the US dollar came off its highs due to progress made in Europe. Over the weekend though, Germany decided to clear the air on the bailout euphoria. In a briefing, Steffen Seibert, chief spokesman for German Chancellor Angela Merkel, remarked that “dreams that are taking hold again now that with this package everything will be solved and everything will be over on Monday won’t be able to be fulfilled.” He added that ways to end the crisis “surely extends well into next year.” The dollar rallied as the Dow (NYSE:DIA) fell more than 200 points in afternoon trading.
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The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) declined more than 3%, but individual gold miners (NYSE:GDX) such as Barrick Gold (NYSE:ABX) and AngloGold Ashanti (NYSE:AU) held up better. Silver miners (NYSE:SIL) First Majestic (NYSE:AG) and Endeavour Silver (NYSE:EXK) both declined nearly 4% in the afternoon, while Great Panther (GPL) suffered a 10% decline after reporting third quarter production reports. The company announced that ore processed in Q3 increased 16% from last year, but a significant drop in ore grades resulted in metal production being lower by 18%. Freeport-McMoRan Copper & Gold (NYSE:FCX) also announced production problems of their own. Shares fell more than 4% after the mining giant was forced to shut down all operations at its Grasberg mining operation due to a labour dispute.
In a Bloomberg survey, 22 out of 25 traders expect gold prices to rise this week, which is the highest proportion since mid-July. “There’s macro-economic, systemic and monetary risk in the world and there’s no sign of that going away anytime soon,” said Mark O’Byrne, the Dublin-based executive director of GoldCore.
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