Just as overall market sentiment is affecting precious metals, inflation figures have also had a significant impact.
The monthly US jobs report was released on Thursday, and it had a significant impact on precious metals.
Precious metals fell on Thursday, March 2, 2017, as the US dollar firmed.
Fluctuations in precious metals could take a lot from crucial economic numbers that come out of the United States.
One of the most crucial factors playing on precious metals over the past few months is the interest rate hike.
Precious metals are dollar-denominated assets, and the demand for these assets usually falls when the dollar rises.
Gold futures for April expiration fell for the second straight day on March 1, 2017, as the US dollar showed strength.
At 6:30 AM EST on March 1, the West Texas Intermediate crude oil futures contract for March 2017 delivery was trading at $54.16 per barrel—a gain of ~0.28%.
Coeur Mining (CDE), Yamana Gold (AUY), Randgold Resources (GOLD), and Cia De Minas Buenaventura (BVN) stocks have seen five-day trailing losses.
Japan is witnessing diminishing monetary stimulus that could boost the price of gold.
On February 21, John Williams, the president of the Federal Reserve Bank of San Francisco, cautioned investors that the global fall in interest rates could make it harder for central banks to keep their economies steady.
Much has been said about the rise in inflation over the past few months, so its impact on gold plays a major role for gold investors.
The rise in precious metals over the last few months has been due to insecurity among investors, given the political climate.
As the US dollar lost some ground on February 20, 2017, its weakening gave a push to gold prices. Gold rose ~0.2% over its previous trading day’s close.
A reduction in volatility could mean a downward swing for gold, and an increase in inflation could mean more demand for gold.
Sibanye Gold has the closest correlation to gold on a YTD basis among the four miners under review.
Last week, the S&P 500 gained in four out of five trading days and closed at record highs. On February 16, the S&P 500 VIX Index rose 5.8% to 11.49.
Last week, Fed Chair Janet Yellen’s comments boosted the probability of an interest rate hike in March to almost 34%.
Changes in the US dollar play crucially on the fluctuations of precious metals.
The market’s current volatility could give a positive bounce to gold.