Gold and silver prices closed lower Monday as some precious metals investors took profit from recent price gains and other investors decided fears of a double-dip recession were overblown and put their money in riskier assets like heavily discounted stocks.
One reason for the lessening fears of a recession was empirical. The U.S. Commerce Department said consumer spending, which accounts for about 70 percent of the nation's GDP, jumped in July at its fastest pace in five months. It was up 0.8 percent on strong demand for vehicles.
The datum encouraged investors and analysts.
It's a little far-fetched to truly believe that we are headed into another recession. This data doesn't support that view at all, Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pa., told Reuters.
Another reason for the lessening fears of a recession stemmed from reflections on last week's speech by U.S. Fed Chairman Ben Bernanke.
Central bankers don't think there's any really immediate screaming problem to deal with and have taken that more positively, Madelynn Matlock, who helps oversee $14.8 billion at Huntington Asset Advisors in Cincinnati, told Bloomberg. Plus, there's the fact that valuation is a whole lot better than it was a couple of months ago. In addition, the absence of any bad news in Europe is good news.
Gold for December delivery on the CME Comex division of the New York Mercantile Exchange fell from $1,797.30 to $1,791.60 per ounce.
Silver declined from $40.95 to $40.55.
The S&P 500 index of large-cap stocks was up in afternoon trading by 2.4 percent, while the Nasdaq composite index gained 2.8 percent.