uploads///Gold Futures versus SPDR Gold Shares GLD

Precious Metals Retreat as the Fed Indicates December Rate Hike

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Oct. 30 2015, Published 2:38 p.m. ET

Gold plunges

Gold futures prices on COMEX, the commodity division of the New York Mercantile Exchange, plunged on Thursday, October 29. Gold lost almost 2.5% of its price and settled the day at $1,147.30 an ounce. Gold dropped nearly 2.7% below its two-week high price, which it reached before the FOMC (Federal Open Market Committee) policy-setting meeting. Gold prices likely moved higher as the Fed resisted lifting the zero interest rates. Only one out of ten members of the Fed voted for raising the rates in the month of October. However, the Fed indicated a likely liftoff in the month of December.

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All precious metals saw a down day on Thursday. Silver was the worst performing precious metal for the day, as it lost approximately 4.6% of its trading price. ETFs that derive their estimates from precious metals, such as the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV) fell 1.0% and 2.5%, respectively. The chart above compares price performance of gold futures and the SPDR Gold Shares ETF (GLD) for the month of October.

Tracking the mining equities

Mining companies that constitute the VanEck Vectors Gold Miners ETF (GDX), such as AngloGold Ashanti (AU), Royal Gold (RGLD), and Goldcorp (GG), also witnessed a fall in their prices. On Thursday, these three companies fell 5.3%, 3.2%, and 10.3%, respectively. Most other mining companies have also retreated, showing five-day trailing losses. Together, the aforementioned companies make up 16.4% of the GDX ETF. The GDX precious metals market indicator fell 4.8% on Thursday, October 29.

The drop in precious metals could prove to be beneficial for physical investors of precious metals. The upcoming festivals in India, which usually witness a rise in demand, may see higher buying due to lowered prices. India has taken the number one position from China in gold buying this year.

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