Precious Metals Blame This for April 19
A precious fall
After witnessing six straight days of increase, gold futures for May expiration had a down day on April 19, 2017. Gold fell about 0.83% and gave a close at $1275.7 per ounce. Silver and platinum followed, falling 0.6% and 0.85% respectively.
Silver and platinum ended the day at $18.33 and $967.8 per ounce. Palladium was the only precious metal that had an up day, scaling 0.6% and closing at $775.5 an ounce.
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The April 19 fall in precious metals was most likely due to the resurgence of the US Treasury yield at 2.2%. The rise of the yield often negatively plays on precious metals as they are non-yield-bearing assets.
Gold and interest rates
The above chart shows the relationship between gold and the US two-year and ten-year rates of interest over the past year and a half. Remember, the higher the interest rates scale, the more investors start parking their money in these assets, deserting gold and silver.
There are chances that future rate hikes from the Fed could negatively impact gold even more, which would also hit assets that closely follow gold, such as the SPDR Gold Shares (GLD) and the iShares MSCI Global Gold Miners (RING). These two funds have scaled 11.1% and 13.7%, respectively.
Most mining shares also fell on Wednesday, April 19, due to the tumble in precious metals. Major mining shares Sibanye Gold (SBGL), Goldcorp (GG), Gold Fields (GFI), and Royal Gold (RGLD) fell 7.8%, 3.1%, 3.7%, and 2.8%, respectively.
Combined, these four mining shares make up about 18.1% of the fluctuations in the VanEck Vectors Gold Miners Fund (GDX), which slumped 3.6% on Wednesday.