Gold and Silver Dip, U.S. Dollar Grinds Higher

On Monday, gold (NYSEARCA:GLD) futures for August delivery decreased $5.40 to settle at $1,577.40 per ounce, while silver (NYSEARCA:SLV) futures edged 26 cents lower to close at $27.04.

Despite both precious metals closing in the red, gold and silver were relatively strong compared to broad market. All three major indices witnessed heavy losses as the eurozone came back into focus. Greece’s Prime Minister Antonis Samaras told Bill Clinton that his nation is in a “Great Depression,” similar to the American one in the 1930s. Meanwhile, German Vice Chancellor Philipp Roesler said he is “very skeptical” that European leaders would be able to rescue Greece. He also explained that the country’s exit from the euro had “lost its terror.”

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The developments sent investors running out of the euro and into the U.S. dollar. The euro fell to as low as $1.2068, making a fresh two-year low against the greenback. The yield on Spanish bonds also climbed above 7.5 percent.  Meanwhile, the dollar index, which measures the currency against a basked of six major currencies, but heavily weighted against the euro, hit as high as 84.00. “Investors are concerned the euro zone will break apart,” said Andrew Wilkinson, chief economist strategist at Miller Tabak & Co. “The uncertainty surrounding the future health of Europe is creating massive tension and leading to selling of the single currency,” according to the WSJ.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 0.50 percent, while the iShares Silver Trust (NYSEARCA:SLV) dipped 0.93 percent. Gold miners (NYSEARCA:GDX) Yamana Gold (NYSE:AUY) and Goldcorp (NYSE:GG) both dropped more than 2 percent. Meanwhile, silver miners (NYSEARCA:SIL) such as First Majestic (NYSE:AG) and Endeavour Silver (NYSE:EXK) declined 1.63 percent and 1.92 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS