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Gold Prices Trade Flat: Sluggish Demand and Improving US Economy

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Nov. 20 2020, Updated 3:20 p.m. ET

Gold prices drop

Below is our gold price and fundamental analysis. For an in-depth fundamental look at crude oil and related companies, sectors, and drivers, please refer to our Gold ETFs page.

COMEX-traded June gold futures fell marginally by 0.50% and closed at $1,183 per ounce on May 11, 2015. Prices traded almost flat—led by weak Asian demand. ETFs like the iShares Gold Trust (IAU) and the SPDR Gold Trust ETF (GLD) also declined marginally in the direction of gold prices. In contrast, the VanEck Vectors Gold Miners ETF (GDX) rallied on Monday’s trade.

Gold price volatility affects gold mining companies like Kinross Gold (KGC), Royal Gold (RGLD), and Primero Mining (PPP). These stocks account for 12.38% of GDX.

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Gold demand in India was sluggish despite the low gold prices and festive seasons. India is one of the largest buyers of physical gold. The Indian rupee depreciation also led to the low gold demand. Weak local currencies mean that gold is expensive due to the strong US dollar. The Indian rupee is trading at a 20-month low. This case was prevalent across most Asian countries like Japan.

The US Dollar Index appreciated against the basket of currencies as uncertainty mounted across the Eurozone. Greece was on the verge of defaulting its debt against the IMF (International Monetary Fund) in the early hours of trading on Monday. In the US, the unemployment rate dropped to a seven-year low. This also suggests the strength of the US economy. This added to the dollar’s strength. However, the US dollar traded marginally lower at the close of trade yesterday.

Gold prices declined for the seventh time over the last ten days. Prices decreased by 0.06% more on the average down days than on the up days, over the last ten sessions. June gold futures had average performances yesterday. Zinc was the worst performer across all of the other commodities on Monday’s trade. Gold dropped slightly by 0.12% YTD (year-to-date)—led by the strengthening US economy and demand.

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