Bullions Rose, Precious Metals Eagerly Await the Rate Hike
Economic data
Gold snapped the loss from last week. It rose by 2.2% on Friday, December 4, 2015. Gold touched the high of $1,084 per ounce—the highest mark in about three weeks. Silver, platinum, and palladium rose by 3.2%, 3.9%, and 5.6%, respectively.
The rise in the precious metals was likely due to the US non-farm payrolls reports that came out on the same day. The payrolls rose by 211,000 in November—better than the expected 201,000. As expected, the unemployment rate stood flat at 5%. It was the same as the previous month. However, the euro saw relative strength. The dollar posted some weakness. The weakness in the dollar was likely due to the fall in the precious metals. Now, precious metals are eagerly waiting for the interest rate hike in mid-December.
US dollar and bullions
The gains posted by all of these precious metals had an extended up day. The metals fell on Thursday. Gold, silver, platinum, and palladium rose by 2.6%, 3.4%, 5.4%, and 2.9%, respectively, on a five-day trailing basis. Due to the rise in the bullions, the DXY currency basket lost almost 1.7% on a five-day trailing basis. The DXY currency basket represents the US dollar against the major world currencies. The dollar-denominated assets and the dollar usually have an inverse relationship. The loss in the dollar pushes the demand for assets priced in the dollar.
The ETFs that take their prices from these precious metals like the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV) rose by 2.3% and 3.1%, respectively, on Friday, December 4. The companies that have their shares priced in the US dollar like Royal Gold (RGLD), Newmont Mining (NEM), and Coeur Mining (CDE) rose by 5.2%, 9.2%, and 8.4%, respectively, on Friday. These three companies account for 10.5% of the price changes in the Market Vectors Gold Miners ETF (GDX).
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