Bad Week For Gold

Published on Saturday, 23 June 2012 13:01 Written by Todd Shriber

Following Thursday’s drubbing, gold posted a small gain Friday, but it wasn’t nearly enough to put a dent in what was a sharp weekly decline. COMEX gold for August delivery rose $1.44 to settle at $1,566.90 per ounce. Spot gold added just 0.2% to finish the day at $1,568.70. Amid deflation fears and no signs of additional quantitative easing from the Federal Reserve, gold futures slid almost 4% this week, tumbling below the psychologically important $1,600 an ounce area in the process.

For most of gold’s decade-long rally, inflation fears have been leading investors to the yellow metal. However, with gold’s safe haven status gone and fears about slowing global economic growth soaring, traders are finding few reasons to bid gold higher. Demand is also slack in key markets.

Indian gold buying has been hurt by a bad monsoon season and a record low in the rupee, which pushed local gold prices to an all-time high, Reuters reported. India is the world’s second-largest gold consumer behind China. The recession in Italy, another major gold consumer, has also worked against gold in the metal’s search for further upside.

Gold prices appeared underpinned a day after Moody's downgraded 15 of the credit ratings of world's biggest banks to reflect the risk of losses from volatile capital markets, Reuters reported.

Despite the tepid action in gold futures today, the SPDR Gold Shares (NYSE: GLD) notched a decent 0.4% gain to close the week. The rival iShares Gold Trust (NYSE: IAU) added 0.46%. Silver futures added 10 cents to close at $26.85, but as was the case with gold, silver’s meager Friday gains were hardly enough to a put dent in what was a savage weekly performance. Silver futures plunged 6.5% for the week. The iShares Silver Trust (NYSE: SLV) added a mere 0.1% and continues its flirtation with critical support at $26.

The other white metals were lethargic on the day as well as the ETFS Physical Platinum Shares (NYSE: PPLT) lost 0.2% on light volume. On decent volume, the ETFS Physical Palladium Shares (NYSE: PALL) gained almost 0.2%, but that fund is still found flirting with critical support in the $57-$58.

As equities rallied a touch today, the major mining ETFs were mixed. The Market Vectors Gold Miners ETF (NYSE: GDX) slid half a percent. GDX’s small-cap counterpart, the Market Vectors Junior Gold Miners ETF (NYSE: GDXJ) impressed with a decent gain of two-thirds of a percent, but that ETF does need to reclaim $21 to excite new buyers. The Global X Silver Miners ETF (NYSE: SIL) fell half a percent on below average volume.