Gold reached six-week high
Gold reached its six-week high mark of $1,159.40 an ounce on Friday, October 9, 2015. Silver was up 0.33% and closed at $15.81 per ounce. Platinum and palladium were up 2.7% and 0.71% and closed at $981 and $708.2 an ounce, respectively. The US data on the same day about September import prices month-over-month fell 0.1%, beating the forecast of -0.5%. It seems that the situation is not unfolding as expected. However, wholesale inventories month-over-month were in line with projections of 0.1%. It seems these statistics did not have as great an impact on prices as the Fed minutes did the day before.
The Fed’s take on liftoff
Metals likely rose as the speculation emerged that the central bank will hold off raising interest rates until next year. Policymakers decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated. Signs that US growth may be slowing have helped gold rebound almost 8% from a five-year record low set in July.
The Federal Reserve feels pretty optimistic about the US economy, and chair Janet Yellen has said the central bank may still raise rates in 2015. Higher interest rates can curb the appeal of precious metals, as they do not generate income as Treasuries and equities do.
ETF investments and mining companies are both waiting for the Fed’s decision. ETFs like the Global X Silver Miners ETF (SIL) and leveraged ETFs like the Direxion Daily Gold Miners (NUGT) have fallen 17.9% and 58.5%, respectively, on a YTD (year-to-date) basis. Companies like Kinross Gold (KGC), GoldCorp (GG), and Eldorado Gold (EGO) have seen a fall in their prices in the past year. These companies make up ~14.6% of the VanEck Vectors Gold Miners ETF (GDX).