Gold and silver shares remained firmly in negative territory on Wednesday afternoon following the release of the Federal Reserve’s latest Beige Book.
The Philadelphia Gold & Silver Index (XAU) finished down by 1.2% at 146.30 – its lowest closing level since May 16th.
Notable gold producers moving lower included Yamana Gold (AUY) and IAMGOLD (IAG) – which dropped by
Coeur d’Alene Mines (CDE) and Hecla Mining (HL) – two widely-traded silver stocks, closed lower by
The sector’s sell-off coincided with weakness in precious metals and stability in the U.S. dollar. COMEX gold futures – per the August contract – closed down by $18.70, or 1.2%, at $1,570.80 per ounce. Silver futures for September delivery settled with a loss of $0.22, or 0.8%, at $27.10 per ounce.
Gold and silver showed a muted reaction to the Beige Book – a recap of economic activity in each of the Federal Reserve’s 12 districts. The Fed reported that the economy as a whole continued to expand at a “modest to moderate pace” in June and early July. In several districts, however, their respective economic growth rates began to decline.
Commenting on the Beige Book, Diane Swonk – chief economist at Mesirow Financial – stated in a Bloomberg interview that “Overall, the report is tepid. It really echoes what the chairman has been telling us for the last two days, and that is that economic outlook is not looking too great. The economy has slowed.”
Nonetheless, based on Ben Bernanke’s testimony to Congress over the past two days, the Fed does not feel that the economy has worsened enough to justify a third round of quantitative easing (QE3) at the present time.
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