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Gold Creates Mixed Reaction in Economic Data

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Economic data

The economic data that came out on consumer confidence on Tuesday, December 29, 2015, remained positive. This can further boost expectations of more interest rate hikes in 2016. Financial confidence is an indicator of consumer spending, which accounts for a majority of overall economic activity. Consumer confidence stood at 96.5, greater than the projected figure of 93.9. However, this positive number didn’t affect the prices of precious metals. On Wednesday, December 30, economic data on US pending home sales came in negative.

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Pending home sales measure the change in the number of homes under contract to be sold but still awaiting the closing transaction. This doesn’t include new construction. This figure stood at -0.9%, much worse than the expected 0.6%. Precious metals gave a mixed reaction to the data. The graph below shows the three-month price movements in gold.

Mining sector

The mining sector bled on December 30, and precious metals kept adding to the negative sentiment. The Direxion Daily Gold Miners Bull 3X ETF (NUGT) and the Direxion Daily Junior Gold Miners Bull 3X ETF (JNUG), both leveraged gold mining-based funds, fell 5.9% and 7.3%, respectively, on Wednesday, December 30.

The fall in gold and other precious metals also extended to gold mining companies such as Yamana Gold (AUY), Gold Fields (GFI), and Iamgold (IAG). These three companies fell 2.1%, 1.4%, and 2%, respectively, on Wednesday. Together, these three companies contribute 8.8% to the price fluctuations of the VanEck Vectors Gold Miners ETF (GDX).

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