What Was the Crucial Factor behind the Rise of Precious Metals?
Precious metals rose
All four precious metals were up on Tuesday, April 4, 2017. Gold touched its highest mark since the end of February on piling global concerns. Gold futures for May expiration touched the day’s high of $1,261.7 per ounce to close 0.35% higher than the previous day at $1,256.7. Gold crossed its 200-day moving average mark, which is a crucial indicator of potential upside for gold.
Silver, platinum, and palladium also rose, following gold. Silver rose 0.59% and ended the day close to $18.40 an ounce. Platinum and palladium rose 0.66% and 0.55%, respectively. The rise of precious metals was mainly driven by weakness in the US dollar and the fall of US Treasuries. The DXY Index fell against a basket of six major world currencies, which boosted dollar-denominated assets like gold, silver, platinum, and palladium.
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As shown in the above chart, gold (GLD) and the US dollar (UUP) often move in the opposite direction to each other. This is because the rise in the dollar makes dollar-based assets more expensive for investors from other countries, whereas a fall in the dollar makes them cheap, so their prices rise due to increased demand.
Investor interest in the SPDR Gold Trust (GLD) rose. The fund rose 0.53% to almost 836.8 tons on Monday from 832.3 tons on Friday. Analysts are expecting more inflow for gold in the coming months due to rising geopolitical concerns.
The mining stocks that also increased on Tuesday, April 4 include First Majestic Silver (AG), Royal Gold (RGLD), Goldcorp (GG), and Newmont Mining (NEM). These four stocks jumped 2.5%, 1.7%, 0.47%, and 0.89%, respectively. Combined, these four miners contribute about 18% of the price changes in the VanEck Vectors Gold Miners Fund (GDX).