In this series, we’ll study the impact of geopolitical risk on precious metals. We’ll examine their relative movement to volatility, equities, and the US dollar on April 11, 2017.
After breaking a six-day gaining streak on Wednesday, crude oil prices opened lower on April 13 before regaining strength.
After unemployment figures were released on Friday, the chances that the Fed will increase the interest rates on Treasuries have gone up.
On Monday, April 10, gold dropped 0.26% and closed at $1,252.3 an ounce.
The US Dollar Index (DXY), which measures the dollar against the basket of six major world currencies, rose almost 0.5% on Friday, closing at 101.18.
Besides the attack on Syria, the latest rise in gold was also backed by dampened expectations that the Fed will raise interest rates soon.
After US President Donald Trump ordered the launch of nearly 60 Tomahawk cruise missiles on a Syrian air base, precious metals experienced a lift off.
Over the past few months, the overall global sentiment has been an important factor that is affecting precious metals.
Gold is a hedge against inflation. When prices rise, investors can park their money in gold. It isn’t clear how well gold protects investors.
Silver was also lower by 0.3%, ending at $18.20 an ounce after having touched a one-month high of $18.40 on the previous trading day.
Investors seem to be in the doldrums regarding the meeting between Donald Trump and Xi Jinping.
The strong economic numbers from the US during 1Q17 have been casting a shadow over precious metals.
Gold has been steady recently, but a negative outcome of the meeting between Donald Trump and Xi Jinping could have a positive impact on precious metals.
All four precious metals were up on Tuesday, April 4, 2017.
Besides the interest rate hike fear and global concerns, another significant indicator that kept gold on its toes was the fluctuation in the US dollar.
Precious metals had a bright first quarter, which ended March 31, 2017. Gold rose about 8.4%, marking its best quarter in almost a year.
Most of the precious metals traded lower on Thursday, March 30, 2017.
Much of the fluctuation in precious metals is due to economic sentiment from financial reports.
Besides the Fed’s stance, another crucial factor that is playing on precious metals is the US dollar.
A rise in interest rates can negatively affect gold and silver funds like the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV).