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Are Gold Prices Stabilizing, or Is the Big Fall Yet to Come?

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Prices back to 2010 levels

Gold futures contracts on COMEX (Commodity Exchange) fell close to 6.78% in the last trading month. The current trading range of $1,090–$1,200 per ounce is what investors saw in late 2010. Gold futures for August delivery on July 29, 2015, fell 0.33% and settled at $1,093 per ounce. Silver, however, saw an up day, rising marginally by 0.7% and settling at $14.70 per troy ounce.

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Bear market indicator

Although gold prices have fallen, they’ve certainly seen more down days than up days. As you can see in the above graph, around July 20, prices opened lower than the previous trading day’s low and closed at a price lower than the previous trading day. That is, on July 21, 2015, the open, close, and settle prices for gold were all less than the previous day’s close of $1,108 per ounce. This “star position” proved to be a clear bear market indicator.

The miner’s cost

The mining cost for gold comes close to $1,000 per ounce on average, which leaves us with a question of whether further falling prices for gold will result in more buying by mining companies and thus force a rally in prices. A stronger, growing economy is most likely a bearish indicator for precious metal prices in this current scenario.

July 29 was positive for gold miners, as the VanEck Vectors Gold Miners ETF (GDX) rose 2.05%. Other mining stocks that picked up in terms of price are Eldorado Gold (EGO), Anglogold Ashanti (AU), Goldcorp (GG), and Newmont Mining (NEM). Together, these contribute about 21.39% to the VanEck Vectors Gold Miners ETF (GDX).

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