Precious Metals Remain Quiet as Japan Prepares to Battle Deflation

On Monday, gold (NYSEARCA:GLD) futures for April delivery, the most active contract, edged 10 cents higher to settle at $1,572.40 per ounce, while silver (NYSEARCA:SLV) futures for May traded flat at $28.50.

The two precious metals remain stuck in consolidation mode, despite central banks sticking to their loose monetary policies. The incoming officials at the Bank of Japan are reiterating calls for the central bank to fight deflation more.

Kikuo Iwata, one of the nominees for a governor post, claims, “It’s monetary policy alone that will be able to alter deflationary expectations. Firms won’t spend their money as they are awash with cash on hand as long as deflation persists. But firms will start using their cash when inflation expectations emerge.”

Meanwhile, governor nominee Haruhiko Kuroda says, “If I were appointed as governor, I would do everything possible to get out of deflation.”

In afternoon trading, the SPDR Gold Trust (NYSEARCA:GLD) declined 0.20 percent, while the iShares Silver Trust (NYSEARCA:SLV) edged 0.05 percent lower. Major gold miners (NYSEARCA:GDX) such as Barrick Gold (NYSE:ABX) and Newmont Mining (NYSE:NEM) both dropped more than 2 percent to make fresh 52-week lows. Silver names such as Endeavour Silver (NYSE:EXK) and First Majestic Silver (NYSE:AG) plunged 7.2 percent and 4.4 percent, respectively.

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Disclosure: Long EXK, AG, HL, PHYS