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How's the Dollar Playing on Precious Metals in September 2017?

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Part 5
How's the Dollar Playing on Precious Metals in September 2017? PART 5 OF 5

What Caused Gold to Rise to Its 1-Year High?

Gold at its 1-year high

Gold has been rising over the past month, with a ~7.0% rise on a 30-day trailing basis. Friday, September 8, 2017, was an up day for gold when it touched its one-year high of $1,358.50 per ounce. Silver followed gold’s lead and closed at $16.50 per ounce. Platinum and palladium, however, had a down day and fell 0.44% and 1.9%, respectively.

The rise in precious metals was most likely due to the weakness in US economic data. Unemployment claims, which measure the number of individuals who filed for unemployment insurance for the first time during the past week, was 298,000. That was much higher than analysts’ expectation of 245,000.

As economic numbers degrade, there are chances that market participants may move toward safe-haven assets such as gold and silver.

What Caused Gold to Rise to Its 1-Year High?

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Market instability

In addition to economic numbers that didn’t meet analysts’ forecast, fluctuations in the US dollar have also been a factor in the rise of gold. Hurricanes Harvey and Irma also prompted the world’s largest economy to focus on havens such as government debt and precious metals. Whenever there’s instability in the markets (VXZ), investors often opt out of risky assets such as equities and park their money in traditional safety assets.

Mining companies have also experienced a rise in their stock prices. Miners that have risen during the past week include New Gold (NGD), Yamana Gold (AUY), Coeur Mining (CDE), and AngloGold Ashanti (AU). These four miners together make up 11.3% of the changes in the VanEck Vectors Gold Miners ETF (GDX).

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