Gold and silver plunge to four-year lows

Gold and silver plummeted to their lowest since 2010 while the US dollar rose against all major currencies on Friday, following the surprise move by the Bank of Japan to increase its huge stimulus program.

Spot gold fell to $1,161.25, a 3% slide, hitting its lowest price since July 2010. US COMEX gold futures ended Friday at $1,171.6, a decline of 2.25% on the day. Silver also took a battering on Friday.

The yen was in virtual free fall after the Bank of Japan surprised markets worldwide by easing its monetary policy significantly.

Japan wants to weaken the yen in order to boost exports and push up prices. Japan and the Eurozone are desperately looking at measures to prevent a prolonged period of deflationary recession; a situation that stifled Japanese GDP growth for nearly two decades.

Gold’s fall is due to the rise in the value of the dollar following the yen’s slide.

In the short term, analysts believe the dollar will rise further, thus depressing the price of gold even more. What may happen over the medium term is more difficult to forecast.

(Source: World Gold Council)

In an interview with Bloomberg Businessweek, CEO of Goldcorp Inc. Chuck Jeannes said gold will likely trade between $1,200 and $1,400 in the next six to twelve months. “While continuing uncertainty about U.S. monetary policy will keep financial investors hesitant, physical demand will support prices,” he added.

Goldcorp posted a net loss of $44 million (loss $0.05 per share) for the third quarter of 2014, compared to net earnings of $5 million ($0.01 per share) in Q3 2013. The loss, which surprised investors, was negatively impacted by a $36 million ($0.04 per share) non-cash reduction in the value of stockpiles at its Peñasquito mine, located in the State of Zacatecas, north-central Mexico.

Barrick Gold Corp. says it aims to reduce debt by $3.5 billion to $7 billion.

India reduces import tariffs on gold and silver

India, a major market for jewelry gold, announced on Saturday that it was reducing import tariffs on gold to $391 per 10 grams and silver to $551 per 1 kg.

Gold is India’s second largest import item, after petroleum. In September, gold imports increased to 95 tonnes, ahead of the festival season.

The Indian government has raised import tariffs on several products in its attempt to contain the current account deficit. In 2013, import duty on gold was raised three times to a record 10%. The government also introduced legislation last year making it mandatory to export 20% of all imported gold.