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A Closer Look at Gold’s Three-Month High on October 12

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Surging bullions

Gold futures for December delivery on COMEX, the commodity division of the New York Mercantile Exchange, settled at a three-month high on October 12, 2015, gaining 0.74% and closing at $1,164.5 per ounce—nearly touching its high of $1,168.6.

After losing marginally on the previous Thursday, October 8—after the Fed released its most recent minutes—gold began to surge. Silver then followed these rises in gold, posting an increase of 0.2% and closing at $15.86 per ounce. Gold prices had not seen these levels since before the July rout. But now gold seems to be breaking the resistance level of $1,170, even surging above it.

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Rising tension

Some expert analysts have suggested that the surge in gold on Monday, October 12, was due to the rising tension between Russia and Syria. According to these experts, it appears that gold likely answered calls for a safe-haven. But there are also hopes that other precious metals, including the much-affected platinum, will also rebound. Still, with gold reaching its three-month high, the bulls seem to be more active, while the dovish Fed minutes have caused rate-hike tensions to ease, giving the yellow metal lover a breather.

Miners retreat

Although the yellow metal shined, most of the major mining companies had a down day on October 12. Stocks like Eldorado Gold Corporation (EGO), Silver Wheaton Corporation (SLW), New Gold (NGD), and IAMGOLD Corporation (IAG) saw returns of -6.80%, -3.90%, -2.30%, and -4.20%, respectively.

The ETF that encompasses all these four stocks, the VanEck Vectors Gold Miners ETF (GDX), also fell by 2.95%. Other few mining ETFs that saw declines on October 12 include the Direxion Daily Gold Miners ETF (NUGT) and the Direxion Daily Junior Bull Gold (JNUG). The above four companies together make up 11.90% of the price changes in the GDX ETF.

In the next part of this series, we’ll weigh the reaction and role of silver.

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