Precious Metals Continue to Fall, Palladium Emerges Strong
China’s buying soared
The recent market turmoil in China and the weakening global markets weren’t able to increase gold prices significantly. It looks like the Fed’s looming decision on the interest rates is keeping a lid on the precious metal prices. In the past few weeks, gold buying rose in China. It looks like gold got some luster there among the falling metals. Since the Chinese economy remains unclear about the amount of gold it can get into the country, Hong Kong’s exports to China are key to understanding the flow into the country. Earlier, Hong Kong had all of the precious metal vaults for China. Now, the Shanghai Gold Exchange has its own previous metal vaults. As a result, gold can be imported directly.
The above chart shows the second quarter import figures for the main countries that are buying gold.
Miners’ carnage
China imported nearly 54 tonnes of gold from Hong Kong in August. This is more than double the quantity imported during the same month in 2014. Most of the gold buying in China usually occurs in October and during the Chinese New Year in February. However, the buying rose sooner this year. The total gold consumption fell 3% in 2Q15—compared to 2Q14.
The interest rate rise is dominating the price movements in the precious metal. The downward determined precious metals have had a significant impact on mining companies. Most of the mining companies ended the day in the red territory due to falling metals and the strong emerging dollar. First Majestic Silver (AG), Agnico Eagle Mines (AEM), and Silver Wheaton (SLW) fell 2.50%, 2.41%, and 4%, respectively, on Thursday, October 1. These three companies contribute 10.50% to the Market Vectors Gold Miners ETF (GDX). GDX fell 2.40% on Thursday. It has five-day trailing loss of 5.70%. Another mining ETF that followed the falling gold prices is the Sprott Gold Miners ETF (SGDM).
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