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Gold Trades Substantially Lower than the 100-day Moving Average

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Unemployment data

Gold futures have been trading low as it saw three down days out of the last four trading days. The unemployment claims data that came out on December 24 stood positively. The number of individuals who filed for unemployment insurance during the past week stood at 267,000. The figure was positive from the forecast figure of 270,000. A lower number of people in the economy staying unemployed is beneficial for the country and thus, favors further interest rate hikes in 2016.

Gold’s price is currently trading at a 4% discount from its 100-day moving average price. However, the prices are quite close to its 20-day moving average prices.

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100-day moving average price

Taking a view from the graph above, we can see that the price of the precious metal is significantly lower than its 100-day moving average price. A possible rebound in the prices of precious metals may just be around the corner.

The SPDR S&P Metals and Mining ETF (XME) and the Sprott Gold Miners ETF (SGDM) fell 3.4% and 3.2%, respectively, on Monday. The fall in these mining-based ETFs is most likely taken from the tumbling stock prices of the mining-based companies. XME and SGDM are currently trading at a 13.8% and 3.7% discount from the 100-day moving average prices, respectively. A rebound in the prices of precious metals can also buoy these mining-based ETFs and get them closer to their 100-day moving average price.

Large precious metal miners like GoldCorp (GG), Barrick Gold (ABX), and Newmont Mining (NEM) fell 3%, 3.7%, and 3.4%, respectively, during the Monday rout of the precious metal market. These three giant companies make up 19.6% of the price changes in the VanEck Vectors Gold Miners ETF.

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