Gold Gets No Love From the ECB
Published on Thursday, 03 May 2012 18:58 Written by Todd Shriber
New York, May 3rd (TradersHuddle.com) – Gold traders were cautious ahead of the April non-farm payroll number as the yellow metal traded lower on news that the European Central Bank is unlikely to engage in more quantitative easing. Comex gold for June delivery fell $19.20, or 1.2%, to finish at $1,634.80 a troy ounce, extending losses to a fourth consecutive day.
Gold has faltered in recent weeks, as neither the Federal Reserve nor the ECB seem inclined to engage in further quantitative easing. Additional QE by the Fed or ECB would depress the already weak dollar and the imperiled euro, all but forcing more global investors to embrace gold. Alas, more QE does not appear to be in the cards and without a legitimate upside catalyst, traders are dumping gold.
The yellow metal has been trading in a tight range in recent sessions and after failing to break resistance at $1,670 an ounce, gold is now in danger of violating support at $1,630. Should that support area fail, downside from there could mean a retreat to $1,585 an ounce or perhaps as low as $1,550. That grim outlook sent the iShares Gold Trust (NYSE: IAU) and the SPDR Gold Shares (NYSE: GLD) down 1% each.
Silver continues to be ravaged as the iShares Silver Trust (NYSE: SLV) lost another 1.7% today. Despite that decline coming on low volume, SLV looks extremely vulnerable to even a slight disappointment on the jobs front Friday. Should the April number miss the 160,000 new jobs analysts are expecting and/or should the March number be revised downward, SLV could be home to intense selling pressure.
In earnings news, shares of Canadian miner Eldorado Gold (NYSE: EGO) plunged 5% on above average volume despite the company saying its first-quarter profit rose to $67.9 million, or 11 cents a share, from $52.5 million, or 10 cents a share, a year earlier. The company produced 55,535 ounces at an average cash operating cost of $452 an ounce compared with 148,577 ounces at $410 per ounce a year earlier.
Recent earnings reports from miners gold miners have been decent, but investors appear to be focusing on elevated extraction costs and that’s hindering the stocks. The Market Vectors Gold Miners ETF (NYSE: GDX) lost almost 4% on strong volume today, falling to a new 52-week low in the process. The Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) slid 3.4% on above average turnover and is also back flirting with its 52-week low. Following a heavy volume loss of 3.1%, the Global X Silver Miners ETF (NYSE: SIL) is close to again testing support at $20.
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