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How Precious Metals Moved on April 10

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How Precious Metals Moved on April 10 PART 1 OF 5

How Precious Metals Moved on April 10

Global concerns hover

Though gold rose on Friday due to the US attack on Syria, it later lost ground. Monday, April 10, was also a dull day for gold. It dropped 0.26% and closed at $1,252.3 an ounce. Silver, platinum, and palladium also followed the downfall. These three metals fell 1.3%, 2.2%, and 1.7%, respectively, on Monday. The three metals closed at $17.95, $938.6, and $789.9 per ounce, respectively.

Gold saw an initial surge in price due to concerns regarding the Chinese troop deployments to the North Korean border. This event spooked the markets, and the haven bids for gold rose. However, the rally didn’t hold strong, as the fundamentals for gold seem weak amid the fear of increasing interest rates.

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Gold and equities

The revival of the equities on Monday could have also been a reason behind the slump of precious metals. The S&P Index is depicted here by the SPDR S&P 500 ETF (SPY), while investment in gold is represented by the SPDR Gold Shares (GLD).

Gold is a famous haven asset, so it often rises during times of turbulence in the equities markets. These two indexes could invariably go in opposite directions. The S&P Index and gold have a correlation of about -0.25. This correlation suggests that about 25% of the time, gold moves in the opposite direction of the S&P Index.

A look at gold and equity market performances shows that a falling stock market isn’t necessarily a catalyst for a major rally in gold.

Mining stocks (AU) (BVN) (HL) (PAAS) that belong to the equity segment of the market are more closely associated with precious metals than the equity markets in general.

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