Gold and Silver Rebound As IMF Provides More Liquidity

On Tuesday, gold (NYSEARCA:GLD) futures for December delivery jumped $23.80 to settle at $1,702.40 per ounce, while silver (NYSEARCA:SLV) futures surged more than $1 to settle near $33.

The International Monetary Fund has enhanced its lending facility and introduced a new six-month liquidity line to encourage countries at risk from the euro-zone crisis to turn to the fund for help.  Today the IMF said a more flexible “precautionary and liquidity line” of credit would act as “insurance against future shocks and as a short-term liquidity window to express the needs of crisis bystanders.”

Although precious metals (NYSEARCA:DBP) were rising before the IMF announcement, the metals spiked even higher afterwards.  In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) gained more than 1%, while the iShares Silver Trust (NYSEARCA:SLV) jumped more than 3.5%.  Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Barrick Gold (NYSE:ABX) climbed more than 2% higher.  Silver Wheaton (NYSE:SLW) popped 2.4%, while First Majestic Silver (NYSE:AG) gained 3.6%.

The U.S. economy grew more slowly than previously estimated in the third quarter, according to a Commerce Department report today. Gross domestic product grew at a 2.0% annual rate in the July-September quarter rather than the previously reported 2.5%.  Though the revision fell below economists’ expectations, evidence in the report of strengthening consumer spending and the first drop in business inventories since the fourth quarter of 2009 means output will likely pick up this quarter.  “The mix or composition of growth improved. Inventory investment was lower so firms are more likely to produce more goods going forward. And exports rose,” said Cary Leahey, a senior economist at Decision Economics in New York.

Investor Insights: Are Precious Metals Holding These Key Support Levels?

Data suggest fourth-quarter growth could exceed 3%, which would be the fastest pace in 18 months. However, the budget super committee’s failure to agree to a package of at least $1.2 trillion in deficit reduction is casting a shadow on next year’s outlook.

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