Gold and Silver Fall After Japan Downgrade

Wall St. Cheat Sheet

On Tuesday, gold (NYSEARCA:GLD) futures for June delivery declined $12.10 to settle at $1,576.60 per ounce, while silver (NYSEARCA:SLV) futures edged 14 cents lower to close at $28.18.

Both precious metals declined for the second consecutive day as the U.S. dollar index climbed higher. The greenback hit as high as 81.53 on Tuesday, following a Japan downgraded by Fitch. The ratings agency cut the nation’s sovereign rating due to the government taking a “leisurely” approach to Japan’s out of control debt problems.

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Fitch downgraded Japan’s rating to A+ from AA. The WSJ reports, “The move comes as parliament is in the midst of debating a bill to raise taxes to help curb the massive deficit. It serves as a reminder to investors that amid concerns about European debt levels, the perceived safe haven of Japan may be short-lived as the debt load continues to rise above 200 percent of annual gross domestic product, the highest among all industrialized nations.” The downgrade gave a clear boost to the U.S. dollar and provided weakness to gold and silver prices.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) fell 1.31 percent, while the iShares Silver Trust (NYSEARCA:SLV) dropped .98 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) declined 1.49 percent and .23 percent, respectively. Meanwhile, silver names such as Silver Wheaton (NYSE:SLW) and Hecla Mining (NYSE:HL) fell .43 percent and .73 percent, respectively.

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