Gold Gets 2016 Kick-Start, Already Rising 3.6%
Gold Gets Kick-Start in 2016: Gold-Silver Ratio Widens
Gold ticks up
Gold has rightly entered a bear market since 2011. It has seen four straight years of decline, including an almost 11% loss for 2015. But gold got a kick-start in 2016, already rising 3.6%. Silver is also going up, but platinum and palladium have fallen steeply due to weak Chinese and other global markets.
It seems that the haven appeal is up for gold and silver, which has affected prices. But history shows us that gold’s haven demand is often short-lived. Once again, the Fed meetings will start determining the movement of gold. The rise in the US dollar is a strong cord that binds the rise in interest rates to the price of precious metals. The increase in the prices of precious metals pushes the US dollar higher, which weighs down greenback-denominated assets. In the graph below, you can see the primary determinants in the price of gold in 2015.
Miners shine
Mining-based companies saw some sunshine due to the rise in the price of gold and silver. Barrick Gold (ABX), Gold Fields (GFI), and Goldcorp (GG) have risen 14.1%, 11.9%, and 8%, respectively, during the past five trading days as of January 8, 2016. Together, these three companies make up almost 18% of the price changes in the Market Vectors Gold Miners ETF (GDX). GDX rose 5.8% on a five-day trailing basis. Another mining-based fund, the Sprott Gold Miners ETF (SGDM), rose 7.3% on the same basis.
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