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US Economic Data, Other Factors That Affect Gold, Silver Prices

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Gold and silver prices

Gold prices have been on a roller coaster ride in June. After rising to the highest level in four weeks, hitting $1,203.40 per ounce on June 19, the precious metal fell 2.6% to end at $1,172.70 per ounce on June 25.

Gold prices rose when the Fed’s stance on gradually raising interest rates became known. Since then, strong US economic data have led to a strengthening in the US dollar and to gold’s decline. We’ll discuss these econ­omic indicators in detail later in the series.

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How are gold ETFs performing?

The VanEck Vectors Gold Miners ETF (GDX) has fallen by 6.8%, and the gold-backed SPDR Gold Trust (GLD) has fallen by 1.4% as of June 25. Silver is also on a losing streak. The iShares Silver Trust (SLV), which tracks the price of spot silver prices, has fallen by 5.2% as of June 25. The above chart shows the year-to-date performance of gold and silver ETFs.

Gold miner stocks have followed gold prices. Goldcorp (GG) fell by 6.5% in the first 25 days of June. Barrick Gold (ABX) fell by 7%, Kinross Gold (KGC) fell by 2.5%, and Agnico Eagle Mines (AEM) fell by 7.9%. Goldcorp and Barrick Gold account for 7.3% and 7%, respectively, of GDX’s holdings.

Series overview

In this series, we’ll analyze recent developments in the US that have impacted the performance of the US dollar and gold and silver prices. We’ll discuss such factors as the US labor market and inflation. These are the most important considerations that the Fed reviews before deciding on the quantum and timing of rate hikes. We’ll also discuss changes in holdings by ETFs and central banks.

Investors should look at these indicators all together to get a holistic appreciation for the future direction of gold and silver prices.

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