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Gold Fell Due to the Higher Interest Rate

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Gold and GLD

The bears in the precious metal markets seem to be active. The gold futures for February expiry fell by $27.2 and closed below $1,050. The 2.5% fall in gold futures also extended to the SPDR Gold Shares (GLD). GLD lost $2.25 of its share price and closed at $100.5 per share. It’s GLD’s lowest close in about a month. On Thursday, the trading volumes in GLD remained high.

Gold traders pushed gold lower. It touched a day low of $1,047 per ounce. The tightening by the Fed caused gold to fall. It erased the six-year gains in the metal. Currently, gold is trading at a six-year low.

GLD is trading at a 5.9% discount from its 100-day moving average price. This brightens the possibility of a reversion. The RSI (Relative Strength Index) for GLD is also at 35.5. This suggests that the asset could be undervalued.

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Mining stocks

Although the Fed stressed that the rate hike will be gradual, it could put off the bears in the market for more than a day. Precious metals rose on December 16 right after the Fed gave its stance. However, December 17 slammed gold lovers. The prices fell to record lows.

Beside GLD, other gold-based ETFs like the iShares Gold Trust (IAU) fell by 2.1%. The mining companies that were the biggest losers on Thursday include First Majestic Silver (AG), Barrick Gold (ABX), and Coeur Mining (CDE). These stocks fell by 10.8%, 9.3%, and 9.1%, respectively. Together, they account for 8.1% of GDX.

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