Gold and Silver Stumble as U.S. Dollar Climbs Higher

On Friday, gold (NYSEARCA:GLD) futures for June delivery, the most active contract, dropped $32.00 to close at $1,436.60 per ounce, while silver (NYSEARCA:SLV) futures for July declined 25 cents to finish at $23.66.

Both precious metals closed in the red as the U.S. dollar index, which compares the greenback in a basked against six other flat currencies, climbed to as high as 83.44. After reaching a four-year high on Thursday, the dollar continued to rise against the Japanese yen and hit 102 yen.

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Christopher Vecchio, currency analyst at DailyFX, explains, “Clearly, this is a result of ‘Abenomics’ or the Bank of Japan’s ultra-easing policy: with yields nonexistent in Japan, investors are forced to search for yield elsewhere, driving down the value of the Yen while boosting currencies with highly-rated sovereigns like the US Dollar. With the new trend developing, the next leg of Japanese Yen weakness has begun – I expect USDJPY to rally towards 103.00 yen by the end of May.”

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 1.3 percent, while the iShares Silver Trust (NYSEARCA:SLV) traded flat. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) dropped 1.9 percent and 1.3 percent, respectively. First Majestic Silver (NYSE:AG) declined 1.8 percent, while Endeavour Silver (NYSE:EXK) edged slightly higher.

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Disclosure: Long EXK, AG, HL, PHYS