Gold and silver prices were sharply lower Thursday morning in a sign that traders are positioning for Federal Reserve tapering at the policy meeting next week. A gold miner ETF also traded to the downside as technical analysts eyed a key support level.
SPDR Gold Shares (NYSEArca: GLD) slipped 2.4% in premarket trade while iShares Silver Trust (NYSEArca: SLV) was off 2.9%. Market Vectors Gold Miners (NYSEArca: GDX) fell more than 3%.
Gold declined to a four-week low after weekly jobless claims fell to the lowest levels since April 2006. Jobless claims dropped below 300,000 but the data was skewed as two states made changes to their computer systems that resulted in some claims not being processed in time, according to MarketWatch.
GLD, the largest gold ETF, is experiencing inflows for the first time since early 2013 as investors closely monitor developments in Syria. [Gold ETF Seeing First Inflow Since February]
“As geopolitical risks fade, the focus is shifting back to QE and the Fed meeting next week, and we expect the market to remain volatile till then,” said Wang Xiaoli, chief investment strategist at CITICS Futures Co., in a Bloomberg News report
Société Générale analysts this week said the gold bounce is over, according to Business Insider report.
“A US military strike now looks much less likely with Syria having accepted Russia’s proposal for Syria’s chemical weapons to be given up for UN control,” they said. “We expect strong ETF gold selling to resume soon as Syria is no longer a bullish factor and US Fed tapering is likely to start at the September meeting … With US real bond yields sharply higher recently and geopolitical risks abating, investors are likely to resume large-scale ETF selling soon.”
Market Vectors Gold Miners
Full disclosure: Tom Lydon’s clients own GLD and SLV.