On Friday, gold (NYSEARCA:GLD) futures for December — the most active contract — dropped $22 to close at $1,308.60 per ounce, while silver (NYSEARCA:SLV) futures fell 43 cents to finish at $21.72. Gold declined nearly 5 percent in only five trading days and posted its worst week since June.
Both precious metals experienced weakness despite consumer sentiment dropping to its lowest level in five months. According to Thomson Reuters/University of Michigan’s preliminary reading, consumer sentiment plunged to 76.8 this month compared to August’s final reading of 82.1. It was the worst reading since April and the third lowest since the beginning of the year.
Richard Curtin, the survey’s director, blamed the decline on “growing concerns that higher interest rates will diminish the pace of economic growth as well as job gains.” A “cooling housing market has also affected homeowners’ sense of personal financial progress,” he said to Reuters.
In an interview with Bloomberg Television, the head of commodities research at Goldman Sachs said gold could even trade below $1,000 per ounce. Jeffrey Currie explained: “While we agree with the mid-cycle price somewhere around $1,200, we believe that at least near term it can overshoot to the downside, which is why we have $1,050 as a target. It clearly could trade below $1,000.” Gold has not traded below $1,000 since 2009.
In afternoon trading, shares of the SPDR Gold Trust (NYSEARCA:GLD) declined 0.8 percent, but the iShares Silver Trust (NYSEARCA:SLV) traded flat. Gold miner (NYSEARCA:GDX) Yamana Gold (NYSE:AUY) managed to climb slightly higher, while silver miner (NYSEARCA:SIL) Hecla Mining (NYSE:HL) gained 0.5 percent.
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Disclosure: Long EXK, AG, HL, PHYS