Gold and Silver Applaud Larry Summers’s Withdrawal
On Monday, gold (NYSEARCA:GLD) futures for December — the most active contract — increased $9.20 to close at $1,317.80 per ounce, while silver (NYSEARCA:SLV) futures jumped 29 cents to finish at $22.01.
Both precious metals received buying support as financial markets around the world seemed to welcome news that former U.S. Treasury Secretary Lawrence Summers has withdrawn his name for consideration to be the next Chairman of the Federal Reserve. The news broke on Sunday when a letter that Summers wrote to President Barack Obama announcing his desire to withdraw was published online.
Summers wrote that, “This is a complex moment in our national life. I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interests of the Federal Reserve, the Administration, or ultimately, the interests of the nation’s ongoing economic recovery.” Summers was considered by many to be an opponent of quantitative easing programs.
Meanwhile, overall industrial production increased only 0.4 percent in August, according to the U.S. Federal Reserve. The data narrowly missed expectations for a 0.5 percent increase and are slightly underwhelming after the zero percent growth experienced in July. Industrial production growth has struggled to remain positive over the past 12 months on the back of a fickle recovery in manufacturing and ongoing economic headwinds.
In afternoon trading, shares of the SPDR Gold Trust (NYSEARCA:GLD) declined almost 1 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped 1.6 percent. Gold miner (NYSEARCA:GDX) Barrick Gold (NYSE:ABX) jumped more than 3 percent. Shares of First Majestic Silver (NYSE:AG) and Silver Wheaton (NYSE:SLW) both fell more than 1 percent.
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Disclosure: Long EXK, AG, HL, PHYS