Gold Closes Above $1,600, Despite Cyprus Deal

Wall St. Cheat Sheet

On Monday, gold (NYSEARCA:GLD) futures for April delivery, the most active contract, decreased $1.60 to close at $1,604.50 per ounce, while silver (NYSEARCA:SLV) futures for May edged 12 cents higher to finish at $28.82.

Both precious metals were relatively strong, as stocks wavered amid developments in Cyprus. The small Mediterranean island reached a deal with international lenders to receive a bailout of 10 billion euros.

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The deal involves shutting down Popular Bank of Cyprus and separating good assets from bad assets. Deposits below 100,000 euros will be moved to the Bank of Cyprus. However, deposits above 100,000 euros will be confiscated to resolve debts and raise capital.

While small depositors look set to avoid confiscation methods that were discussed last week, confidence is lost in the country as capital controls take effect. Furthermore, Dutch Finance Minister Jeroen Dijsselbloem said the deal in Cyprus will serve as a template for future bank restructuring in the euro zone. The Dow Jones Industrial Average (NYSEARCA:DIA) dropped more than 100 points after Dijsselbloem’s remarks, but recovered as he later denied the statement.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) dipped 0.15 percent, while the iShares Silver Trust (NYSEARCA:SLV) increased 0.50 percent. Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Goldcorp (NYSE:GG) both fell more than 1.0 percent. Silver miners such as Endeavour Silver (NYSE:EXK) and Hecla Mining (NYSE:HL) also dropped more than 1.0 percent.

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Disclosure: Long EXK, AG, HL, PHYS