The precious metals market and mining companies took a hit Tuesday as investors reacted to underwhelming U.S. retail figures and ongoing concerns over Greece and the Eurozone, driving down the price of gold and shares of companies that produce it.
Gold for April delivery fell $7.20 to $1,717.70, marking three straight days of declining prices. The precious metal has endured a rough February after jumping 11 percent in January. Silver for March delivery also slipped, losing 37 cents to settle at $33.35.
The market slid after Moody's downgraded Britain and France's triple-A credit ratings as a result of the ongoing Eurozone debt crisis, adding that Italy, Spain, Portugal, Slovakia, Slovenia and Malta could also face lowered ratings. The downgrades and lackluster retail sales bolstered the dollar against the euro, driving a sell-off in gold.
Any rallies will be capped against the overall potential of an economic slowdown, absent truly new actions by the European governments, said Frank McGhee, head precious metals trader at Integrated Brokerage Services LLC, according to Reuters. I'm not surprised to see gold working in a trading range in the next couple of weeks.
Major U.S. stock indexes closed mixed in a tight range.
Shares of precious metals producers faced a mostly rough day, declining as much as three percent in some cases.
Barrick Gold (ABX), Newmont Mining (NEM) and Eldorado Gold (EGO) ended the day down fractions of a percent to $47.60, $58.76 and $13.07 respectively. IAMGOLD (IAG) slid 1.5 percent to $16 and New Gold (NGD) fell 1.3 percent to $11.10.
Silver companies endured a rougher day. While Silver Wheaton (SLW) enjoyed a slight fraction of a percentage boost to $35.34, First Majestic Silver (AG) fell 0.8 percent to $19.09, Hecla Mining (HL) fell slightly to $4.90, Hochschild fell 2.9 percent to $791.48 and Endeavor Silver (EXK) fell 2.6 percent to $10.37.
In the short term, gold looks hostage to swings in investor risk sentiment regarding the euro and the Eurozone sovereign debt situation, in which the focus is centered largely on Greece, James Steel, an HSBC analyst, said in a note.