Gold Plays Deer in the Headlights as Investors Lick Their Chops for December 16



Gold goes sideways

As of December 9, gold prices have been fluttering between gains and losses over the past few days, and gold does not look willing to budge, given the looming fear of the US Federal Reserve’s upcoming rate hike decision.

Gold futures for February delivery on Tuesday, December 8, traded flat, gaining a minuscule 0.01%. Then, on December 9, gold surged by 0.11%, ending the day at $1,076.5 per ounce.

Silver also gained by 0.52% and settled at $14.2 per ounce. Platinum was the biggest gainer among the precious metals on December 9, climbing by 2.3% and closing at $865.8 an ounce. Palladium too gained by 0.81%, closing at 552.3 an ounce.

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Gold’s narrow trading range as of December 9

Gold has maintained a narrow trading range of $1070–$1090 per ounce over the past few trading days, as of December 9. Calendar 2015 has in fact been dominated by the Fed’s decision—or indecision—to raise or not raise the US interest rate. Raising the rate will likely weigh down precious metals because they do not bear interest or have any other cash flows.

Even the terrorist attacks in Paris and the Russia-Turkey turbulence were unable to push up and hold higher prices of gold based on haven demands. The fall in precious metals has long affected mining ETFs like the leveraged Direxion Daily Gold Miners ETF (NUGT). NUGT and the leveraged Proshares Ultra Silver (AGQ) have lost 75% and 25% respectively so far during 2015.

Mining stocks dig deeper

The mining-based stocks of Agnico Eagle Mines (AEM), Primero Mining Corporation (PPP), and Silver Wheaton Corporation (SLW)—companies that take their prices from precious metals on a large scale—gained by 8.9%, 14.4%, and 6.1%, respectively, on a 30-day trailing basis, despite the 1.5% loss in gold and the 1.8% loss in silver futures. These three stocks together make up 10.4% of the Market vectors Gold Miners ETF (GDX). The GDX indicator itself has gained 5.9% on the same basis as of December 9.


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