Understanding the Mid-October Rebound in Precious Metals
The rebound of precious metals
Gold rose to a three-week-high level of $1,304.1 per ounce on Friday, October 13, and closed at $1,302.9. Gold futures for November expiration were 0.63% higher that day.
Silver, platinum, and palladium futures were 0.84%, 0.65%, and 1.2% higher, respectively, the same day, and all four precious metals were showing five-day-trailing rises in price. Palladium also showed a 30-day trailing rise, while the other three precious metals show a loss during that time frame.
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The rise in the metals was most likely due to the recent bearish sentiment toward the US economy, with tax plan gridlock and stalled healthcare reform bills having a negative impact on the US dollar. Remember, any fall in the US dollar is often negative for precious metals as they are all greenback-based assets.
Meanwhile, another interest rate hike in December 2017 is now uncertain as US inflation levels remain subdued, but any increased possibility of a hike is negative for precious metals because they are non-yield bearers. This means that any delay in rate hikes causes precious metals to surge.