Gold: Worse, Not Better

Published on Tuesday, 08 May 2012 17:22 Written by Todd Shriber

Gold showed a little bit of resilience in the face of European headwinds on Monday, but that moxy didn’t last long as the yellow metal was sent tumbling today as traders got around to the business of worrying about what bad news could be surface next out of the Euro Zone. Lingering concerns about the continent’s sovereign debt contagion sent Comex gold for June delivery down $34.60, or 2.1%, to $1,604.50 a troy ounce.

As traders started to realize Greece’s lack of coalition government could spur the country’s departure from the Euro Zone, the euro was sent to lows against the dollar not seen since January in Asian trading. The bad news carried over to the U.S. session due to the fact that gold has been behaving as more of risk asset than safe haven in 2012. A stronger dollar didn’t help the cause for gold as the DB US Dollar Index Bullish (NYSE: UUP) added half a percent on the day.

Not only are gold futures now resting at four-month lows, but the yellow metal took a look below the critical $1,600 an ounce level today. It did rebound, but even the brief look below that important level might be enough to encourage traders to do more damage on the short side in the coming days. The SPDR Gold Shares (NYSE: GLD) and the iShares Gold Trust (NYSE: IAU) each lost 1.94% on the day. Volume was heavy in GLD.

The other precious metals fared no better. The iShares Silver Trust (NYSE: SLV) slid 1.9% on strong volume and that ETF now resides below $29 for the first time since January. Platinum was weak as well as the ETFS Physical Platinum Shares (NYSE: PPLT) lost 1.1%. This was a $170 ETF in February. PPLT closed below $150 today.

On volume that was slightly above the daily average, the ETFS Physical Palladium Shares (NYSE: PALL) plunged 4%, violating support at $65 in the process. PALL’s chart is now so ugly that a retest of the December lows around $57 seems likely.

Not surprisingly, the miners were rocked once again. Welcome to the new 52-week low club for the Global X Silver Miners ETF (NYSE: SIL), which barely closed above $19. The Market Vectors Gold Miners ETF (NYSE: GDX) plunged 3.4% on volume that was well above the daily average, cascading to a new 52-week in the process. On better than double the average daily volume, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) slid 4.5% and also touched a new 52-week low.