Why Precious Metals Fell on Monday, September 18
Precious metals slide
Precious metals saw a down day on Monday, September 18. Gold, silver, and platinum fell 1.1%, 3.1%, and 1.1%, respectively, on the day. However, palladium rose 0.94%. Friday, September 15, saw a similar pattern, as palladium was the only precious metal that rose.
This downward trend by precious metals could be due to the speculation that surrounds the Federal Reserve meeting, which started on September 19. It is widely expected that the policymakers would suggest trimming the country’s $4.5 trillion balance sheet via bond purchases.
However, interest rates are expected to remain constant. Traders are now pricing in a 53% chance of an interest rate hike during the Federal Reserve’s December meeting.
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The chart above is a depiction of the fluctuations in precious metals that affect the US two-year and ten-year interest rates.
The dollar’s impact
The rise of the US dollar against the basket of the major world currencies also contributed to the rebound of precious metals. The dollar (UUP) has fallen a whopping 9.9% since the beginning of 2017, which gave some strength to these metals. However, the recent rebound in the dollar is pressuring these dollar-based assets.
The impact of the US dollar and the Fed’s plans were also felt by mining shares Yamana Gold (AUY), Silver Wheaton (SLW), Randgold Resources (GOLD), and Franco-Nevada (FNV). These four miners fell 4.2%, 1.6%, 1.8%, and 1.1%, respectively, on Monday.
Combined, these four miners comprise ~18.7% of the VanEck Vectors Gold Miners ETF’s (GDX) portfolio. GDX fell almost 1.7% for the day. The SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV) also dropped 0.93% and 2.1%, respectively, on the same day.