On Friday, gold (NYSEARCA:GLD) futures for August delivery fell $7.30 to close at $1,321.50 per ounce, while silver (NYSEARCA:SLV) futures for September dropped 38 cents to finish at $19.77. Despite the dip, gold has now climbed higher for three consecutive weeks.
Both precious metals declined as consumer sentiment reached its highest level in six years. According to the Thomson Reuters/University of Michigan final reading, consumer sentiment in July came in at 85.1, a slight increase from 84.1 in June. It was the best reading for the index since July 2007.
The reading on current economic conditions, which measures whether Americans think it is a good time to make large investments, jumped to 98.6 in July compared to 93.8 in June. However, consumer expectations declined from 77.8 to 76.5 over the same period.
The U.S. Dollar Index, which compares the greenback in a basket against six other fiat currencies, hit a new monthly low at 81.55. Expectations are rising that the Federal Reserve will offer a new dovish stance on forward guidance, a communicative policy tool. The central bank is currently believed to keep interest rates at record lows until 2015, but that could be extended to 2016 when the Federal Reserve meets next week.
Christopher Vecchio, a currency analyst at DailyFX, said, “Such a shift is inherently U.S. Dollar negative as it takes away a prime fundamental reason for U.S. Dollar strength the past few months.”
In afternoon trading, shares of the SPDR Gold Trust (NYSEARCA:GLD) fell 0.75 percent while the iShares Silver Trust (NYSEARCA:SLV) dropped 1.9 percent. Gold miners (NYSEARCA:GDX) Newmont Mining (NYSE:NEM) and Yamana Gold (NYSE:AUY) declined 0.80 percent and 1.3 percent, respectively. Shares of First Majestic Silver (NYSE:AG) dropped 3.6 percent.
Follow Eric on Twitter @Mr_Eric_WSCS
If you would like to receive professional analysis on miners and other precious metal investments, we invite you to try our premium service free for 14 days.
Disclosure: Long EXK, AG, HL, PHYS