Gold and the commodity rout
The important US economic data that investors had set their eyes on were out on Wednesday, November 25, 2015. The US dollar received a push due to the data, thus increasing the likelihood of the Fed’s rate hike in December.
As the Federal Reserve will likely raise the interest rate in December, precious metals prices, which are non-interest bearing, may retreat. This is the primary reason behind the current fall seen in the commodities market as a whole, especially gold.
Above is the performance chart of the S&P GSCI (Goldman Sachs Commodity Index) for gold prices. Gold is currently ranked tenth among the 24 commodities listed on the S&P GSCI.
The economic data
The data released on November 25 included unemployment claims, which were at a much better number than had been expected. Expectations were 273,000 unemployed, and the actual figure stood at 260,000. This number was also better than the previous figures.
Manufacturing output rose well above economists’ expectations in October, and a gauge of US business investment plans surged. Surprisingly positive order numbers also spurred the markets, giving a push to the US dollar, thus pulling gold down.
The fall in gold resulted in mixed performances from mining ETFs. The SPDR S&P Metals and Mining ETF (XME) rose 0.19%, while the leveraged Direxion Daily Gold Miners Bull 3X ETF (NUGT) lost 2.3%. Mining stocks that rose on November 25 included Yamana Gold (AUY), Pan American Silver (PAAS), and Coeur Mining (CDE).
Together, these three companies contribute 6.2% of the price changes in the VanEck Vectors Gold Miners ETF (GDX).