How Gold Bullion Rose and Fell during August



Gold bullion at the end of August

Gold losses were also followed by precious metals. Spot gold fell as much as 2% to a one-week low of $1,117 per ounce as of August 26. The implied volatility of gold rose to 17.43 from the close to 14.70 during mid-August. The precious metal is still up by close to ~5% from a 5.5-year low of $1,077 reached in July. However, it has lost more than 3% since it touched a seven-week high of $1,168.40 last week.

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Silver fell ~4% to $13.95—the lowest level since August 2009. Palladium reached its five-year low of $518 on August 26. The fall on a 30-day trailing basis is close to 2.60%. It recovered almost 7.30% at the close of trade on August 27. However, platinum had a brighter month. It rose ~3% on a 30-day trailing basis. Platinum hit a low ~$970 per ounce on August 25.

Waiting for the Fed’s direction

Investors are more likely focusing on the Fed’s decision of the interest rate hike instead of the safe-haven appeal of the bullions. However, the lagging decision on the liftoff move has kept investors in dismay. The current figures at the end of August suggest that gold and platinum were ending the month with a positive value. In contrast, silver and palladium ended the month in the red. However, the precious metals have rebounded from sharp falls.

According to a poll by Reuters, the US second-quarter GDP (gross domestic product) growth would be revised up to 3.20% from the 2.30% advance estimate last month.

ETFs and mining stocks

Bullion-backed ETFs like the iShares MSCI Global Gold Min ETF (RING), the VanEck Vectors Gold Miners ETF (GDX), and the VanEck Vectors Jr. Gold Miners ETF (GDXJ) ended August with a rise of 1.45%, 2.62%, and 5.12%, respectively. Most of the precious metal mining companies have gone through carnage in the past year. Most of the major mining companies have become debt-ridden. Companies like Barrick Gold (ABX), Kinross Gold (KGC), and Iamgold (IAG) have suffered a YoY (year-over-year) loss of 62%, 55%, and 58%, respectively. These stocks account for ~11% of GDX.


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