US dollar versus gold
Sticky lower rates kept the US dollar in check on Wednesday, October 28. The DXY currency basket encompasses the six major world currencies—the Canadian dollar, Swedish krona, Swiss franc, British pound, Japanese yen, and the Euro. It fell 0.19%. The US Dollar Index had a good month. It rose 1.80% on a 30-day trailing basis. The dollar held a nearly two and a half month high against this basket of currencies after the Federal Reserve signaled that it might raise interest rates in December. After the liftoff, the US dollar could rise. A stronger dollar could be a drag on dollar-denominated commodities. It makes them more expensive for buyers using foreign currencies.
The weakness in the US dollar gave strength to the precious metals because they’re dollar-denominated. Dollar-denominated precious metals become cheap for investors and the prices rise. Gold, platinum, and palladium have seen losses YTD (year-to-date). They fell 2.20%, 17.70%, and 15.10%, respectively. YTD, silver rose 1.40%.
The above chart compares gold and the dollar in 2015.
China’s imports grew
China’s gold imports rose. The imports are 47% higher for the year. They’re the highest since November. The total import figure from Hong Kong from January to September stands at 582 metric tons. The figure is about 3% higher than the year before. Imports only witnessed a rise in the third quarter. In 1H15, the numbers were 20% lower than the same period in 2014. Last week, Swiss federal customs data showed that exports to Hong Kong in September rose 64.9%. This was the largest monthly exports into the country for 18 months.
The rising demands in the eastern countries seem to have given some breathing room to the miners as well. Leveraged mining ETFs like the Direxion Daily Gold Miners ETF (NUGT) and the Direxion Daily Junior Bull Gold 3X (JNUG) both rose on a 30-day trailing basis. Mining companies like New Gold (NGD), Newmont Mining (NEM), and First Majestic Silver (AG) also saw a positive rise in their price in the past trading month. These three stocks account for 8.30% of the VanEck Vectors Gold Miners ETF (GDX).