Gold Breaks 200-Day MA, Silver Plummeting

Gold and silver prices were falling hard Wednesday morning following renewed anxiety over euro zone leaders’ ability to agree on sufficiently strong treaty reforms and a debt solution, as well as the results of the last scheduled 2011 meeting of the U.S. Federal Reserve Board’s Open Market Committee.

Spot gold was down more than 1.8% at 10:50 a.m., with a bid price of $1,601.10 per ounce and an ask price of $1,602.10, having traded as high as $1,632.50 and as low as $1,598. The London afternoon reference price fix came in at $1,603, according to Kitco market data.

The price of gold has now fallen to its 200-day moving average support level, which BullionVault puts at $1,610 an ounce. The 200-day MA support held repeatedly during the volatile market downturn during September-October, one market analyst noted. A breach would signal a reversal in trend and a bear market in gold.

“We have the beginnings of a real bear market, and the death of a bull (in gold),” said Dennis Gartman, who advised readers of his investment newsletter to avoid buying gold back in August.

Spot silver was down a whopping 6.2% Wednesday morning, bid at $28.94 per ounce with an ask price of $29.04. The morning high as of time of writing was $30.25 and the low was $28.74. Wednesday’s reference price was set at $29.92 in the London a.m.

A weaker euro and stronger U.S. dollar isn’t supportive of higher precious metals, or share prices, it appears, nor was word from the U.S. Federal Reserve yesterday and Europe today. For better or for worse, the markets were disappointed that the FOMC shied away from any additional easing of monetary policy. Italy had to pay a coupon rate of nearly 6.5% to sell all the five-year bonds it wanted to. Also, German leaders rebuffed another call by euro zone members for the European Central Bank “to intervene decisively to stop the crisis escalating,” according to Reuters.

Turning to stock exchange trading, gold and silver trusts were falling fast and hard.

• The SPDR Gold Trust (NYSE:GLD) was showing losses of more than 2.7%.
• The iShares Gold Trust (NYSE:IAU) was down around 2.9%.
• The iShares Silver Trust (NYSE:SLV) was falling sharply, down between 6% and 6.6%.

Gold and silver mining ETFs were following suit.

• The Market Vectors Gold Miners ETF (NYSE:GDX) was down about 4.6%.
• The Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) fell about 5.25%.
• The Global X Silver Miners ETF (NYSE:SIL) was down some 6.2%.

Gold mining shares were showing sharp losses across the board.

• Agnico-Eagle Mines (NYSE:AEM) was showing losses of some 4.5%.
• Barrick Gold (NYSE:ABX) was down around 4.5%.
• Goldcorp (NYSE:GG) was showing losses of around 3.5%.
• Newmont Mining (NYSE:NEM) was around 3.25%.
• NovaGold Resources (AMEX:NG) was more than 5.8% lower.

Silver mining shares were taking it on the chin as well.

• Coeur d’Alene Mines (NYSE:CDE) was moving lower, down nearly 5.8%.
• Hecla Mining (NYSE:HL) was down more than 8.5%.
• Pan American Silver (NASDAQ:PAAS) was down more than 6.2%.
• Silver Wheaton (NYSE:SLW) was showing losses of 6.6%.
• Silver Standard Resources (NASDAQ:SSRI) was down more than 8%.

As of this writing, Andrew Burger did not own a share in any of the aforementioned stocks. Adrian Ash of BullionVault contributed to this report.