Gold & Silver Hit by the Yen

On Monday, gold (NYSE:GLD) futures for December delivery declined $22 to settle at $1,725.20 per ounce, while silver (NYSE:SLV) futures slipped 93 cents to settle at $34.35.

Market Insight: How Will the Yen Intervention Affect Precious Metals?

Early Monday, the Japanese government sold the yen for the second time since August after hitting another post-World War-II record high against the US dollar (NYSE:UUP).  A currency intervention is often considered a way to boost exports.  “We started currency intervention this morning in order to take every measure against speculative and disorderly moves and to prevent risks to the Japanese economy from materializing,” Prime Minister Yoshihiko Noda told parliament.  The intervention came after the dollar reached a low of 75.31 yen, and the intervention sent the dollar surging to 79.53 yen.  The Bank of Japan confirmed the intervention, but did not comment on the size of the action.  “It’s been massive, really, that’s the only word to describe it,” said Michael Turner, strategist at RBC Capital Markets.  “From what we gather, it’s larger than their most recent intervention.”

On Monday morning, the large Japanese yen intervention move sent the dollar surging higher and dollar denominated assets lower.  Gold reached as low as $1,705, while silver fell to $34.09 in morning trading.  “Gold and other precious metals are being knocked this morning by profit-taking and the strong US dollar,” said analysts at Commerzbank.  In afternoon trading, gold miners (AMEX:GDX) such as Barrick Gold (NYSE:ABX) and Yamana Gold (NYSE:AUY) fell 2% and 3.25%, respectively.  Silver miner (NYSE:SIL) First Majestic (NYSE:AG) fell more than 4%, while Fortuna Silver (FSM) edge nearly 1% lower.

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