Weak Consumer Sentiment Fails to Save Precious Metals

GOLD

On Tuesday, gold (NYSEARCA:GLD) futures for December — the most active contract — dropped $10.70 to close at $1,316.30 per ounce, while silver (NYSEARCA:SLV) futures fell 27 cents to finish at $21.59.

Both precious metals closed lower for the third consecutive trading day despite consumer confidence hitting its worst level in four months. The index declined more than expected to 79.7 this month compared to 81.8 in August, according to The Conference Board, an industry group. It is the lowest reading since May and the biggest month-over-month drop since March. Economists were expecting a reading of 79.9.

Lynn Franco, director of economic indicators at The Conference Board, said in the group’s report, “Consumer Confidence decreased in September as concerns about the short-term outlook for both jobs and earnings resurfaced, while expectations for future business conditions were little changed.”

Meanwhile, the U.S. Dollar Index, which compares the greenback in a basket against six other fiat currencies, continued to climb higher in the wake of the Federal Reserve’s decision to keep quantitative easing unchanged last week. The central bank is still expected to taper bond buying before the end of this year.

By the end of Tuesday, shares of the SPDR Gold Trust (NYSEARCA:GLD) closed slightly higher, while the iShares Silver Trust (NYSEARCA:SLV) managed to gain 0.5 percent. Barrick Gold (NYSE:ABX) gained more than 1 percent, while Newmont Mining (NYSE:NEM) increased 0.4 percent. However, shares of First Majestic Silver (NYSE:AG) and Endeavour Silver (NYSE:EXK) both dropped about 1 percent.

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Disclosure: Long EXK, AG, HL, PHYS