Gold and silver prices lost luster Thursday as the dollar
rallied and the euro tumbled on news that Spain may need as much
as 62 billion euros ($78 billion) extra to bailout its troubled
In afternoon trade,SPDR Gold Shares (
) fell 2.6% to a three-week low.IShares Silver Trust (
) dropped 4.29%. The miners crashed even harder.Market Vectors
Gold Miners ETF (
) plunged 4.29%, while
Silver Miners ETF (
) collapsed 6.08%.
Precious metals investors were disappointed that the Fed said
it would be buying longer-dated government bonds to support the
economy but not outright print money, which would devalue the
dollar and boost precious metals. That's while the dollar rallied
against foreign currencies on safe-haven buying and risk aversion
to foreign markets.PowerShares DB US Dollar Index Bullish (
), tracking the greenback against a basket of the major
currencies, jumped 0.89%.CurrencyShares Euro Trust (FXE) lost
GLD and SLV both hit price resistance at their 10-week moving
averages. The upswing from the previous four weeks looks at best
like a countertrend rally in downtrend that started in
UUP rebounded strongly after pulling back to its 10-week
average from a 52-week high at May's end. FXE's chart looks like
UUP's upside down. It hit resistance at its 10-week average after
making a countertrend rally in a multiyear downtrend.
SPDR S&P 500
(SPY) skidded 1.86%.
SPDR Dow Jones Industrial Average (DIA) fell 1.7%.
PowerShares QQQ (QQQ), a basket of the 100 largest
nonfinancial stocks on the Nasdaq, dropped 2.05%.
IShares MSCI EAFE Index (EFA), tracking developed foreign
markets, slumped 2.27%.
IShares MSCI Emerging Markets Index (EEM) plummeted 3.19%.
The rally leading up to the Fed's announcement is fading as
investors see the affects of Operation Twist will be little if
anything at all, market watchers say.
"The Fed action is minimalist. They are causing a market to
worry that they may be out of bullets," said David Kotok,
chairman and chief investment officer at Cumberland Advisors of
Sarasota, Fla. in a brief to reporters. "It would have been
better for them to change the text and keep policy constant."
Fed Chairman Ben Bernanke said the central bank was ready to
take more action if "appropriate." Analyst Bill McBride of the
Calculated Risk blog believes poor GDP growth will prompt the Fed
to unleash a third round of quantitative easing, or QE3, at its
August meeting unless employment improves significantly.
"Bernanke made it clear that further accommodation is very
likely if employment indicators don't improve soon," he wrote.
"He also pointed out that the Fed can't do any more 'twisting'
because of the lack of short duration securities."
Unfortunately, previous rounds of quantitative easing and
efforts to keep interest rates low haven't produced the results
the Fed intended, such as getting people to refinance their homes
and borrow more money to spur growth. Many homeowners can't
refinance because their homes are underwater and therefore aren't
able to take advantage of lower rates.
"It may be starting to dawn on Fed officials that they are
running out of policy options," Ed Yardeni wrote in his daily
client note. "They might even be starting to realize that
monetary policy can't fix all of our problems, especially since
most of the major ones are attributable to reckless fiscal and
excessive regulatory policies."
The major U.S. indexes all hit resistance at their 10-week
averages after briefly breaking above that technical level
earlier this week.
Biggest ETF Losers And Percentage Change
IShares MSCI Ex US Industrl (AXID) -10.8%
VS Inverse VIX Shrt Term (XIV) -7.0%
Market Vect Jr Gld Mine (GDXJ) -6.8%
IPath Pure Beta Crud Oil (OLEM) -6.4%
IPath DJ-UBS Cotton ETN (BAL) -6.3%
IShares MSCI EmrgMkt EEur (ESR) -5.8%
Silver Miners (
IShares MSCI China Index (MCHI) -5.5%
IShares MSCI Sweden (EWD) -5.4%
IShares MSCI So Africa (EZA) -5.3%
Biggest ETF Gainers And Percentage Change
ProShrs VIX ShrtTrm Fut (VIXY) 6.7%
VS VIX Short Term ETN (VIIX) 6.6%
VS VIX Short Term ETN (VIIX) 6.6%
IPath VIX ShrtTrm ETN (VXX) 6.4%
C-Tracs Citi VIX ETN (CVOL) 4.9%
IPath Pure Beta Sugar (SGAR) 4.7%
IShares MSCI Emg Mkt Fincl (EMFN) 4.4%
IPath Coffee ETN (JO) 4.3%
IPath VIX Mid ETN (VXZ) 3.8%
IPath Nat Gas ETN (GAZ) 3.6%
ProShrs Short FTSE China 25
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