Precious metals retreated
On Wednesday, November 18, 2015, gold fell to $1,062 per ounce, the lowest level in almost six years. Silver, platinum, and palladium fell 0.61%, 0.82%, and 2.6%, respectively on Wednesday. Palladium was the biggest loser, falling almost 3.1% on a five-day trailing basis.
The Direxion Daily Gold Miners Bull 3X ETF (NUGT), a mining-based ETF, saw positive returns on Wednesday, rising 8.4%. The Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG) rose 5.3% that day. Below is a three-day pivot chart for gold that shows its retreating journey even after the geopolitical instability after the attacks on Paris.
US inflation data showed consumer prices returning to growth and rising by 0.2% in the year to October, adding to the slump in gold prices. Positive news on the inflation front is favorable for an interest rate hike. The figures pointed to such a move by the Fed. An interest rate hike will curb the appeal of precious metals, as they don’t pay any interest or dividends like other investment vehicles.
Gold has averaged $1,156 per ounce so far in 2015. Industry experts continue to have a negative outlook toward gold. Falling prices can also be unfavorable for gold mining companies. Lower prices mean falling profit margins for miners.
Barrick Gold (ABX), Eldorado Gold (EGO), and Iamgold (IAG) have lost their share price significantly in the current year. These three companies make up 11.7% of the VanEck Vectors Gold Miners ETF (GDX).