How Overall Economic Climate Affects Silver
The economic performance of the overall world market has a considerable impact on precious metals, especially gold and silver.
Precious metals are known to perform better in a volatile atmosphere.
Silver has performed slightly better than gold and platinum on a year-to-date basis.
All four precious metals witnessed a rise in price on Monday, March 20, as the US dollar slipped to its six-week low.
All four precious metals have found room to breathe as looming fears of an interest rate hike have now passed. Gold rose 0.27% on March 17, 2017.
When the interest rate hike took place on March 15, 2017, much of the upside in precious metals had already been priced in by the market.
The bullish bias continued during the trading session on March 15. Gold touched the day’s high of $1,221.2 per ounce.
Market volatility impacts precious metals. Even amid the rising interest rate, if market volatility rises, investors can expect gold to increase.
The buoyancy of precious metals could be challenged even more by future interest rate hikes, as the Fed indicated by its latest hike on March 15.
In times like these, monitoring the implied volatilities of large mining stocks is all the more important.
Before the Fed’s rate hike decision on March 15, gold had retreated for nine days in a row, touching its lowest mark of $1,195 per ounce.
The precious metal market had experienced a slump in the days leading up to the Fed’s decision to hike the interest rate on March 15.
Prior to the Fed’s rate hike on March 15, precious metal investors had been keeping a close eye on the employment figures released on Friday, March 10.
When analyzing the precious metals market, it’s important to take a look at the relationship between gold (IAU) and silver (SLV).
Among the four precious metals, palladium has been the most resilient for the past few months, outperforming the other three so far this year.
As platinum markets are looking at a deficit in supply in 2017, the fundamentals for the price of these metals seem supportive.
Precious metals investors are carefully watching the overall market sentiment. The performance of the economy will likely determine the course of interest rate hikes by the Federal Reserve.
Compared to last week’s slump, precious metals prices rebounded on March 13, 2017. Haven demand for precious metals likely resurfaced ahead of the elections in Europe.
The directional move of the interest rate is a crucial determinant of the direction precious metals will take.
The US equity markets (SPY) (SPX) have rebounded since President Trump took office. As expected, precious metals have fallen in the past few months.