Fed Chatter Ignites Gold and Silver

On Wednesday, gold (NYSEARCA:GLD) futures for August delivery jumped $17.30 to settle at $1,634.20 per ounce, while silver (NYSEARCA:SLV) futures surged $1.08 to close at $29.49. It was the highest settlement for gold since early May.

Both precious metals logged impressive gains as more Federal Reserve aid is expected due to more slowdown fears. Fed Whisperer Jon Hilsenrath from the WSJ writes, “Fed policy makers could take a small precautionary measure, like extending for a short period its ‘Operation Twist’ program, in which the Fed is selling short-term securities and using the proceeds to buy long-term securities. Or, policy makers could take bolder action such as launching another large round of bond purchases if they become convinced of a significant slowdown.”

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Equities across the board also climbed higher as investors salivated at more central bank easing. Later in the day, the Fed also released its Beige Book, which said “hiring was steady or showed modest increase” and “inflation remained modest across districts.” However, the report represents the Fed’s outlook from a few weeks ago and excludes the most recent information about the unemployment rate ticking higher on far weaker-than-expected new jobs. Gold pared gains, but the U.S. dollar still remained in the red for the day.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) traded flat, while the iShares Silver Trust (NYSEARCA:SLV) gained 2.7 percent. Gold miners (NYSEARCA:GDX) such as Goldcorp Inc. (NYSE:GG) and Yamana Gold (NYSE:AUY) declined .95 percent and 1.62 percent, respectively. Shares of Barrick Gold (NYSE:ABX) dropped more than 4 percent as the company ousted CEO Aaron Regent, citing poor share-price performance. Silver investments such as Silver Wheaton Corp. (NYSE:SLW) and Coeur d’Alene Mines Corp. (NYSE:CDE) both increased almost 1 percent.

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Disclosure: Long EXK, AG, HL, PHYS