Gold and Silver Dip Following Weak Data

On Thursday, gold (NYSEARCA:GLD) futures for August delivery dropped $50.30 to settle at $1,565.50 per ounce, while silver (NYSEARCA:SLV) futures fell $1.55 to close at $26.84. It was gold’s sharpest decline since the beginning of April.

Both precious metals suffered today as more weak economic reports were released and investors rushed into the U.S. dollar. The HSBC China Manufacturing Purchasing Managers’ Index decline to 48.1 in June, compared to 48.4 in May. It was the eight consecutive monthly reading below 50, which indicates contraction.

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“With external headwinds remaining strong, exports are likely to decelerate in the coming months,” HSBC economist Qu Hongbin said in a note accompanying the survey, according to Reuters. “The sharp fall of prices and moderation of new orders suggest weak domestic demand, posing de-stocking pressures for Chinese manufacturers.” Meanwhile, the dollar index gained 1 percent and hit as high as 82.40.

The SPDR Gold Trust (NYSEARCA:GLD) closed 2.54 percent lower, while the iShares Silver Trust (NYSEARCA:SLV) declined more than 4 percent. Gold miners (NYSEARCA:GDX) Yamana Gold (NYSE:AUY) and Barrick Gold (NYSE:ABX) both closed 5 percent lower. Silver names such as First Majestic (NYSE:AG) and Silver Wheaton (NYSE:SLW) finished the day 7.07 percent and 6.39 percent lower, respectively.

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Disclosure: Long EXK, AG, HL, PHYS