Haven Demand for Gold Sees a Resurgence—What about the Rate Hike?

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Haven Demand for Gold Sees a Resurgence—What about the Rate Hike? PART 1 OF 5

Will Haven Bids Buoy or Drown Gold?

European election concerns

Compared to last week’s slump, precious metals prices rebounded on March 13, 2017. Haven demand for precious metals likely resurfaced ahead of the elections in Europe.

On the day, gold moved away from the five-week low it had touched in the previous week, as a rate hike seems increasingly certain.

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Gold futures rose 0.6% to $1,208.1 per ounce on March 13. The lowest mark gold touched was $1,194.6 on March 10. Silver also rose 0.1% to end at $17.1 per ounce on March 13. It touched a low of $16.78 in the last week of January 2017. Platinum rose 0.3% and closed at $944.6 per ounce on March 13. Palladium rose 0.5% on the day, ending up at $747.7 per ounce.

Global turbulence

The above chart shows the performances of gold and silver as depicted by the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV) over the past month.

Usually, silver is known to be more volatile than gold. The volatilities of gold and silver were ~12% and 21%, respectively, on March 13. During times of turbulence, gold usually outperforms most other assets. Silver often more closely associates with the industrial sentiment.

The holdings of the SPDR Gold Trust, the world’s largest gold-backed ETF, fell nearly 1% to 825.2 tons on March 10, 2017. Investors are cutting down their long positions in these two loved metals due to falling prices.

The precious metals shares that have fallen the most over the past five trading days include Kinross Gold (KGC), Hecla Mining (HL), AngloGold Ashanti (AU), and Randgold Resources (GOLD). Many other companies have seen rises in their prices during the same timeframe despite precious metals’ losses.


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