Gold and Silver Pause as Dollar Shows Strength

On Thursday, gold (NYSE:GLD) futures for December delivery declined $14.10 to settle at $1,668.50 per ounce, while silver (NYSE:SLV) futures fell $1.12 to settle at $31.66.

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The US dollar (NYSE:UUP) gained while JP Morgan’s earnings release scared investors. Although JPM beat lowered expectations, a deeper analysis reveals that nearly 29 cents of earnings per share came from an accounting trick known as DVA, debit value adjustment.  Financials across the board headed lower in another so-called risk-off trading day.

As the chart below shows, gold has been making a steady climb since the September selloff.  However, gold is now meeting resistance near $1680, and could be on the verge of a major breakout or decline.

Gold miners (NYSE:GDX) were not immune to the selloff today.  Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) fell nearly 2% in afternoon trading.  Although gold has been volatile lately, JP Morgan’s London-based metals team raised its fourth quarter price target from $1800 to $2,150 per ounce.  Analyst John Bridges has an overweight rating on Barrick Gold, Goldcorp (NYSE:GG), Jaguar Mining (NYSE:JAG), Kinross Gold (LGC), and Newmont Mining (NYSE:NEM).  Silver miners (NYSE:SIL) also felt the pain today. First Majestic (NYSE:AG) and Endeavour Silver (NYSE:EXK) both declined more than 1%.

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