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Gold and silver prices are falling as the U.S. dollar strengthened following yesterday’s Federal Reserve decision not to impose a third round of quantitative easing.
Gold prices are down 1.9% to dip back below $1,600 per ounce after spending more than a week in the $1,620 range. Silver prices declined even more, declining 2.35% to $27.46 an ounce – near its 52-week low.
Other metals are also falling. Platinum declined 0.55% to $1,446 an ounce. Copper dropped to a one-week low of $7,388 per ton and is now down 3% for the year and 12% for the quarter.
The dollar’s 0.3% rise yesterday was the driving force that sent commodity prices down. Metals tend to move inversely against the U.S. dollar.
The Federal Open Market Committee’s decision to forgo QE3 – a bond-buying measure designed to stimulate economic growth – in favor of an extension of the more modest ‘Operation Twist’ program pushed the dollar up against the euro, yen, rupee and other currencies. The rupee actually fell to a record low 56.55 against the dollar at one point. The dollar also managed to hit a five-week high against the yen.
Gold and silver prices are now both down slightly for the year. For gold, in particular, that’s a major departure from recent years, when prices for the yellow metal have risen by an average of nearly 36% a year.
That said, we’re not even halfway through 2012. There’s still plenty of time for gold and silver prices to go on a run – something our resident Resource Prospector Kevin McElroy has repeatedly insisted will happen as the dollar loses strength.