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Gold Prices Remain Weak despite Prevailing Uncertainty

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Jul. 16 2015, Updated 9:13 a.m. ET

Gold prices near four-month lows

Gold prices have been steadily falling since June 16 when they touched $1,203 per ounce. Since then, gold prices have fallen by 3.9% as of July 7. The spot gold price of $1,156.3 per ounce is close to the lowest it has been in the last four months. Previously, mid-March had seen such levels as the US dollar strengthened to multi-year highs.

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How are gold ETFs performing?

The SPDR Gold Trust (GLD), the ETF that tracks the price of spot gold, lost 2.6% in the last ten days of trading. In the same timeframe, the VanEck Vectors Gold Miners ETF (GDX) lost 7.4%.

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, including:

  • the US labor market
  • Chinese gold demand
  • gold ETF holdings
  • US trade balance

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.

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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