Bullions Look Vulnerable as Investors Wait for Economic Data
Continuous losing streak
Gold has been following an ongoing losing streak for the past four days. Gold fell lower on Tuesday, November 3, 2015. It gave up 1.9% of its price. Gold futures for December delivery trading on COMEX, a commodity division of NYMEX, closed almost $20 lower than the previous day’s closing price. It touched the low of $1,113.60 and closed at $1,114.10 per ounce on November 3. Gold prices have fallen almost 4.9% on a five-day trailing basis as of Tuesday, November 3.
The indication of the rising interest rates in December had a negative impact on all of the precious metals. Now, they’re following a downward trend—like the one seen after the September FOMC (Federal Open Market Committee) meeting.
Watching the data
Investors are watching the data that will come out in the US on November 4. The data are for non-farm unemployment changes. Favorable employment numbers boost the economy. Strong numbers increase the chances of an interest rate liftoff. The rising interest rates will make the precious metals slow down. Rising rates will also pull down the prices. The trade balance, PMI (purchasing managers’ index), and FOMC members speaking will give more information regarding the Fed’s decision about raising the rates.
Higher interest rates could boost the value of the dollar compared to other currencies. This makes gold less attractive because the metal doesn’t produce yield like Treasuries. The data will give the clearest indication of whether the Fed will lift the rates from near zero for the first time since December 2008.
Tracking the ETFs and miners
The ETFs that have followed gold and silver returns and lost on a five-day trailing basis include the iShares Gold Trust ETF (IAU) and the Market Vectors Junior Gold Miners ETF (GDXJ). These two indicators fell 4.4% and 6.8%, respectively, on a five-day trailing basis as of Tuesday, November 3. The mining equities that followed the returns in the bullions include Aurico Gold (AUQ), Agnico Eagle Mines (AEM), and New Gold (NGD). These three companies account for almost 8% of the Market Vectors Gold Miners ETF (GDX).
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