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Gold and Silver Continue to Struggle

Wall St. Cheat Sheet

On Wednesday, gold (NYSEARCA:GLD) futures for June delivery, the most active contract, declined $4.70 to close at $1,382.70 per ounce, while silver (NYSEARCA:SLV) futures for May fell 32 cents to finish at $23.31.

Both precious metals declined, despite chatter that low inflation rates provide more room for central banks to keep monetary policies very accommodative.

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St. Louis Fed President James Bullard told reporters at a Levy Economics Institute event, Inflation is pretty low right now, and its been drifting down. If it doesnt start to turn around soon, I think well have to rethink where we stand on our policy, according to CNN.

Meanwhile, Goldman Sachs remains bearish on gold and believes the sell-off in gold ETFs has the potential to continue. Although gold traded below the $1,450/toz target embedded in our short gold recommendation, we maintained our short recommendation, as we argued last week that prices could decline more than we initially thought as positioning is stretched and the momentum is to the downside, explains an analyst from the bank.

By the end of the day, the SPDR Gold Trust (NYSEARCA:GLD) edged 0.05 percent higher, while the iShares Silver Trust (NYSEARCA:SLV) fell nearly 1.0 percent. Gold miners (NYSEARCA:GDX) such as Yamana Gold (NYSE:AUY) and Newmont Mining (NYSE:NEM) both dropped more than 4.0 percent. Endeavour Silver (NYSE:EXK) plunged 7.8 percent.

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Disclosure: Long EXK, AG, HL, PHYS