Brutal Day For Gold Thanks To Greece

Published on Friday, 10 February 2012 21:33 Written by Todd Shriber

New York, February 10^th (TradersHuddle.com) – It was bad way to end a bad week for gold as stalled talks over a Greek bailout package sent the yellow metal lower by $15.90, or 0.9%, to a close of $1,725.30 a troy ounce in New York. For the week, gold futures slid 1.2% as technical selling gave way to lingering doubts about the ability of European policymakers to craft and execute a substantive plan to keep Greece from default. In better news, CME Group said late Thursday it will cut the trading deposit required to open a speculative position in the benchmark gold futures contract by 12% to $10,125, the Wall Street Journal reported.

The situation wasn’t much better in terms of Friday performances for other precious metals. The iShares Silver Trust (NYSE: SLV) dropped 1.2%, but the silver lining there, no pun intended, was that volume was quite weak. In a note out today, Citigroup said it views silver as under-priced relative to gold and that it expects silver to outperform its pricier cousin over the near-term. The current gold/silver ratio rests around 51, but the 200-day moving average is 47.64, which Citi believes retested, Barron’s reported.

Separately, UBS commented that as long as gold futures can hold the $1,700 market that would be a positive signal. Those comments weren’t enough to keep the SPDR Gold Shares (NYSE: GLD) and the iShares Gold Trust (NYSE: IAU) from each losing half a percent on the session. GLD is facing stiff technical resistance at $170.

Give the ETFS Physical Platinum Shares (NYSE: PPLT) some credit. The ETF was able to scratch out a positive close, no small feat on a day like today, but even with that PPLT still hasn’t touched key overhead resistance at $165. The ETFS Physical Palladium Shares (NYSE: PALL) lost 0.8% on the day after never really threatening resistance at $70. The good news here is that PALL on fell on below average turnover.

As is usually the case on a day when Greece roils global markets, metals miners get smacked and that’s exactly what happened today. The Market Vectors Gold Miners ETF (NYSE: GDX) tumbled 1.4% while the Global X Silver Miners ETF (NYSE: SIL) slid 1.8%. Both losses were seen on weak turnover. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) lost almost 2% and that means support has given out $28, the 20-day moving average. For the week, GDXJ was down almost 6% and if $26 is violated, this ETF has a lot more downside in it.

Copper miners were crushed as well as the Global X Copper Miners ETF (NYSE: COPX) plunged 3.2% on weak volume. The iShares MSCI Chile Investable Market Index Fund (NYSE: ECH) was down just half a percent.