The Impact of Economic Data on Gold and Miners
Price changes for precious metals have been dependent on economic data. Economic numbers on Friday, January 6, 2017, had an impact on precious metals.
US economic numbers have an impact on rate hikes, which in turn play a significant role in the price determination of gold and other precious metals.
Gold prices fell on Friday as compared to the previous day.
Gold suffered a great deal in November and December mainly due to the speculation of rising interest rates and the surge in the US dollar.
Market participants are waiting for the Eurozone inflation numbers and survey data from the UK manufacturing, service, and construction sectors.
Investors were somewhat pessimistic about gold during the last quarter of 2016. Most of the fluctuations were due to the news of the interest rate hike.
Among the other precious metals, silver also fell on December 30, 2016. Silver fell 1.6% and closed at $16 per ounce. Silver rose almost 15% in 2016.
The correlation between gold and the US Dollar Index is -0.36. It means that about 36.0% of the time, gold and the dollar move in opposite directions.
Gold prices for February expiration fell on the last trading day of the year. Gold fell 0.53% and closed at $1,152 per ounce on December 30, 2016.
During November, after the presidential election, gold’s gains were mainly due to the strong US dollar. The US Dollar Index rose to a 14-year high.
The indications of a stronger economy in China could bring more pessimism to gold. Precious metals are in high demand when market volatility rises.
The US gold futures for February expiration were trading 0.45% and ended at $1,138.8 per ounce on December 27.
Gold futures prices edged higher on Wednesday, December 28, 2016. The short covering in the precious metal likely helped the prices stay afloat.
An important factor besides the rate hike phenomenon that’s played on precious metals has been the US dollar. The dollar has been strong over the past month.
Amid fears of an interest rate hike, precious metals have plunged during 4Q16. Among the four precious metals, gold took the worst hit.
Traders and investors also look at moving averages while making market entry or exit decisions.
Market surveys suggest that Cushing crude oil inventories rose between December 16 and December 23, 2016.
The Federal Reserve’s ideal inflation rate is 2% in order to ensure stability and employment—in short, a healthy economy.
Trump recently attacked Fed rates and even talked about trying to gain more control over the independent body.
Will President-Elect Trump Solve Imminent Issues? Markets Think So. We Don’t.