Chinese Economy Spooks the Markets and Buoys Gold
Platinum Falls and Palladium Rises Due to the Volkswagen Scandal
DXY
Bullions have come under pressure since the July rout. Gold, silver, and palladium rose 1.02%, 3.11%, and 14.06% on a 30-day trailing basis as of September 24, 2015. The sell-off in platinum due to the Volkswagen scandal resulted in a fall of 2.42% in platinum futures prices.
The Dollar Index (DXY) consists of six major world currencies. These currencies are the euro, yen, pound, Canadian dollar, Swedish krona, and Swiss franc. The Dollar Index rose 1.87% on a 30-day trailing basis and it gained 1.51% in the last five trading days as on September 24. The rise in the dollar has backing from the FOMC’s (Federal Open Market Committee) decision to raise the interest rate later this year. The liftoff of the rates seems possible. With interest rates rising, gold may lose its sheen. This could strengthen the US dollar.
The above chart compares the price movements for the US dollar and gold.
Chinese markets are shrinking
Asian stocks looked set for their biggest single-day fall in a month on Wednesday, September 23. Data showed that activity in China’s factory sector fell unexpectedly to a six and a half year low. The looming concerns from the biggest gold, other metals, and raw material consumers likely led investors into safe-haven assets. The US dollar rose 0.31% on September 24. Since the Chinese economy spooked the global equities, gold also rose due to investors desire for safe-haven assets.
Tracking gold ETFs and miners
Gold ETF investments like the iShares MSCI Global Gold MIN (RING) and the Market Vectors Jr. Gold Miners ETF (GDXJ) rose 3.30% and 6.58%, respectively, on a 30-day trailing basis due to the rise in gold prices.
Mining equities also rose during the last trading session on September 24. The top performers on the same day include Barrick Gold (ABX), Agnico-Eagle Mines (AEM), and Newmont Mining (NEM). Together, these three stocks account for 17% of the price changes in the Market Vectors Gold Miners ETF (GDX).
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