Gold and Silver Decline as Europe Receives Downgrades

On Friday, gold (NYSEARCA:GLD) futures for February delivery decreased $16.90 to settle at $1,630.80 per ounce, while silver (NYSEARCA:SLV) futures fell 60 cents to settle at $29.52.

Euro-zone governments are expecting new debt-crisis commotion following reports ratings agency Standard & Poor’s (NYSE:MHP) plans to downgrade the credit ratings of two of the euro zone’s six AAA-rated nations.

France (NYSEARCA:EWQ) and Austria (NYSE:EWO) are set to be lowered to AA+, one official told the Financial Times. Germany (NYSEARCA:EWG) will be left as the only large AAA-rated euro nation supporting the AAA-rated European Financial Stability Facility.  “To a large degree it’s widely anticipated,” John Wraith from Bank of America said. “However, we think the reality of it is going to have a knock-on, ongoing impact on these markets.  It clearly deteriorates still further the credit worthiness of a lot of the European banks and just keeps that negative feedback loop between struggling banks and the sovereigns that may have to support them if things go from bad to worse in full force.”

Don’t Miss: Global Factors Boost Gold and Silver Demand

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 1 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell 2 percent.  Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Barrick Gold (NYSE:ABX) declined by 1.90 percent.  After receiving a downgrade from UBS (NYSE:UBS), First Majestic Silver (NYSE:AG) declined 5 percent, while Silver Wheaton Corp. (NYSE:SLW) only declined 1.7 percent.

Demand for silver eagles continue to soar.  According to the latest data from the U.S. Mint, silver eagle sales have already hit almost 4.6 million in January.  There was only one month last year that had a greater sales amount, and there are still more than two weeks left in the current month.

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To contact the reporter on this story: Eric McWhinnie at

To contact the editor responsible for this story: Damien Hoffman at