A Look at Global Concerns that Impact Precious Metals
After the Federal Reserve increased the interest rate on US Treasuries on June 14, the market seems have taken a breather. Now, the focus is on the Fed regarding the next set of rate hikes in 2017.
In addition to the rate hike phenomenon, the overall unrest in the world markets has a substantial impact on precious metals and their mining shares. The Brexit secretary, David Davis, started negotiations on June 19 in Brussels to set the terms through which Britain would leave the European Union.
Other global factors that could affect gold include President Trump’s ability to bring about financial reforms, unrest in the Middle East, and the elections in Europe.
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Volatility and gold
As you can see in the graph above, volatility and gold walk hand-in-hand, especially when there is increased unrest in the market. Turbulent times give a kick to gold as a safe-haven asset.
At the end of 2015, we saw that gold tracked with volatility. There is a chance that a drop in volatility could also pressure precious metals.