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Precious Metals Tumble, Awaiting Liftoff

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Tumbling precious metals

Gold has seen more downside price movements than upside in the past few trading days. November brought carnage to precious metals as their prices saw steep falls. Gold futures, traded on COMEX, have fallen almost 5.5% since the start of the month and saw a trailing-30-day loss of 7.8%. Also, silver futures plummeted and gave up almost 11.2% of the price on a trailing-30-day basis. Below is the price chart for the prices of platinum and palladium futures traded on the COMEX.

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Platinum tumbled to a nearly seven-year low of $865.3 on Thursday, November 12. The precious metal has seen its worst weekly drop in about four years. Platinum has a trailing-30-day loss of almost 15%, whereas palladium is the worst-performing precious metal, losing 21.9% on the same basis. Palladium touched its two-and-half month low of $530.7 per ounce. It was likely the worst week for palladium since September 2011.

Economic performance

As seen in the chart above, the precious metals seem determined to head southward after the October meeting of the Federal Reserve. The fund flow in the ETFs backed by platinum and palladium have also fallen. ETFs backed by Gold and silver like the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust (SLV) have also followed the same route as the metals. Assets of the SPDR Gold Shares ETF—the top gold ETF—fell to their lowest since September 2008.

The major precious metal mining companies like Sibanye Gold (SBGL), Agnico Eagle Mines (AEM), and Newmont Mining (NEM) have also retreated after the confirmations of the hike being just around the corner. These three companies together determine 12.7% of the price changes in the VanEck Vectors Gold Miners ETF (GDX). GDX itself has also already seen a year-to-date loss of 28.4%.

The performance of the US economy is closely watched by industry experts as that will be the core determinant of the interest rate hike. However, the hawkish stance in the previous meeting and affirmations by the Federal Chair makes the rate hike virtually certain.

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