Gold and silver prices were sinking Thursday, and precious metal miners were in a similar state of decline, as the latest Federal Reserve commentary spurred a selloff across the group.
Indications from the U.S. central bank that its long-running and massive bond purchases could moderate later this year sent the dollar higher, and gold, which tends to move in the direction opposite the greenback, sharply to the downside. With the Fed signaling its willingness to play a smaller role in the financial markets to keep rates down, that mitigated the worries-about-hyperinflation theme that was for several years kind to gold investors, some of whom acquired the metal on expectations it would retain value as prices increased significantly due to a dollar that could buy less.
Recently, gold was weaker by 5.8% at $1,294 an ounce in New York trading. At its worst, the drop put gold back at a level it hasn't seen since the fall of 2010, and takes its loss for the year to more than 22%. An especially rough patch came two months ago, when between April 9 and April 15, gold lost 14%.
Silver was getting hit even harder on the session, slumping 8.2% to $19.85 an ounce.
The Fed's suggestion that it may not stay as active points to its belief that the U.S. economy is at or near to the point that central bank support, in terms of direct intervention, can abate. That perception of stability can also work against gold, which by its supporters is viewed as a safe place to put money in times of turmoil. While a strengthening U.S. economy is going to see some inflation, a slow and steady increase in prices would be expected to diminish gold's attractiveness to potential buyers, whose bigger concern is a rapid fall-off in the dollar's power.
Along with commodities, stocks and exchange-traded funds associated with the metals were in full retreat. The SPDR Gold Shares (GLD) ETF was losing 4.2% to $125.20, while the Market Vectors Gold Miners (GDX) ETF fell 5.2%. The iShares Silver Trust (SLV) was down 6.5% at $19.27.
Elsewhere, Goldcorp (GG) was sliding 5.6%. AngloGold Ashanti (AU), Randgold (GOLD) and Kinross Gold (KGC) were all shedding at least 3.1%. Yamana Gold (AUY) was one of the leading decliners, giving back 7.3% to $9.60.