Gold and Silver Fall After Japan Downgrade
Both precious metals declined for the second consecutive day as the U.S. dollar index climbed higher. The greenback hit as high as 81.53 on Tuesday, following a Japan downgraded by Fitch. The ratings agency cut the nation’s sovereign rating due to the government taking a “leisurely” approach to Japan’s out of control debt problems.
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Fitch downgraded Japan’s rating to A+ from AA. The WSJ reports, “The move comes as parliament is in the midst of debating a bill to raise taxes to help curb the massive deficit. It serves as a reminder to investors that amid concerns about European debt levels, the perceived safe haven of Japan may be short-lived as the debt load continues to rise above 200 percent of annual gross domestic product, the highest among all industrialized nations.” The downgrade gave a clear boost to the U.S. dollar and provided weakness to gold and silver prices.
In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 1.31 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped .98 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) declined 1.49 percent and .23 percent, respectively. Meanwhile, silver names such as Silver Wheaton (NYSE:SLW) and Hecla Mining (NYSE:HL) fell .43 percent and .73 percent, respectively.
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