Precious Metals Recap: Gold Fails to Break $1,700

On Wednesday, gold (NYSEARCA:GLD) futures for April delivery fell $27 to settle at $1,657.90 per ounce, while silver (NYSEARCA:SLV) futures dropped more than 60 cents to fall below $32.

Both precious metals declined after a report by CPM Group suspects that the peak in gold prices last September may have been the cyclical peak in an ongoing bull market.  Furthermore, the U.S. dollar index (NYSE:UUP) climbed to as high as 79.34, bouncing off the prior day low of 78.75.

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However, the report cites large debts and currency market volatility as issues providing support for gold prices to remain above $1,400 an ounce in the coming years. “These factors should remain supportive of gold prices, keeping them at historically high levels, but it may be that these issues will not push gold prices significantly higher from present levels on a sustained basis,” explained CPM Group.

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 1.19 percent, while the iShares Silver Trust (NYSEARCA:SLV) fell 1.55 percent.  Gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both decreased about 1.7 percent.  Meanwhile, silver investments such as Silver Wheaton Corp. (NYSE:SLW) dropped 3.4 percent.  Shares of Silvercorp Metals Inc. (NYSE:SVM) and Endeavour Silver (NYSE:EXK) declined 3.4 percent and 3.7 percent, respectively.

Goldman Sachs (NYSE:GS) released their own thoughts about gold this morning.  The firm said, “As we look forward, our U.S. economists expect subdued growth and further easing by the Fed in 2012, which should push the market’s expectations of real rates back down near zero basis points and gold prices back to our 6-month forecast of $1,840 per ounce.”

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Disclosure: Long EXK, AG, HL, PHYS

To contact the reporter on this story: Eric McWhinnie at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com