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Gold Prices Remain Weak in June

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Gold price performance

Spot gold prices were down 1.1% in first 11 days of June. The SPRD Gold Trust ETF (GLD) tracks spot gold prices. It’s down 0.6%, while the VanEck Vectors Gold Miners ETF (GDX) is down 3.8% in the same time period. GDX tracks the performance of major and intermediate gold producers.

This is happening despite the softer dollar. We’ll discuss this in more detail later in this series.

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Gold indicators

Gold prices are impacted by a host of variables. In this series, we’ll look at the following factors that investors can track to get a sense of the direction of gold prices.

  • US labor market
  • Chinese gold demand
  • gold ETF holdings
  • inflation

We’ll also look at the impact of US data on the dollar and gold prices. Then, we’ll discuss various factors of the US labor market. These are the most important considerations the Fed reviews before deciding on the quantum and timing of rate hikes. The Fed’s looming rate hike has been the single most important variable impacting gold prices lately.

Gold price outlook

Based on the above indicators, we’ll see how some indicators are supporting gold prices, while others—like strengthening US labor markets—are putting pressure on gold prices. At this point, it isn’t clear what direction gold prices will take in the future. We’ll analyze these opposing forces in detail in the rest of this series.

Holistic view

Most of these indicators are published monthly, while others are published weekly and quarterly. Although they’re strongly correlated, these indicators are subject to divergences and short-term statistical noise. The best approach for getting a full picture is to look at these indicators as a whole instead of individually.

These indicators should point you in the same direction as gold prices. They will also suggest movements in companies’ share prices like Goldcorp (GG), Royal Gold (RGLD), Silver Wheaton (SLW), and Kinross Gold (KGC). Combined, these companies account for 19.1% of GDX.

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