Gold Relaxes before the Fed Gives Its Verdict



Gold keeps waiting

Gold futures for February delivery on December 15, 2015, fell marginally by 0.17%, losing almost $2 from the previous day’s close and closing at $1,061.6 per ounce. Gold seems to have taken a breather as it awaits the much-discussed FOMC (Federal Open Market Committee) policy-setting meeting verdict.

Gold futures have plummeted in the past few trading days, losing 1.2% on a five-day-trailing basis. Gold has been following an alternate up and down trading day pattern as it eagerly waits for the outcome of the Federal Reserve’s last meeting of 2015.

Investors predict that gold may bear strain once the Fed lifts the interest rate for the first time in a decade. This is because gold is a non-cash flow bearing asset that may lose its charm to investors once Treasuries offer above-zero interest rates to its bearers.

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ETFs and miners

All other precious metals except for gold rose on December 15. Silver, platinum, and palladium rose 0.55%, 0.66%,and 3.3%, respectively.

As gold fell marginally on the day, the mining sector was saved from further price chops. Though gold-backed ETFs the SPDR Gold Shares ETF (GLD) and the iShares Gold Trust ETF (IAU) fell 0.27% and 0.29%, respectively, mining-based ETF the VanEck Vectors Gold Miners ETF (GDX) rose 0.52%.

The gain in most mining-based ETFs came from rises in the share prices of precious metals mining–based companies such as Coeur Mining (CDE), AngloGold Ashanti (AU), and New Gold (NGD). These three stocks rose 6.2%, 5.2%, and 3.1%, respectively, on December 15.

Together, these three companies make up about 7.2% of the price changes in GDX.


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