Since the start of the new year, the financial markets have been victimized by turmoil that was likely initiated by the Chinese markets. The US stock market’s stumble triggered a risk-averse sentiment among many investors, pushing them back into safe-haven assets like gold and silver.
Gold had been on a continuous winning streak, and it saw four straight sessions of gains from $1,073.60 on January 14 to $1,106.20 per ounce on January 20. These gains stemmed from the rattled equity markets. The chart below shows a three-day pivot chart for gold that shows its gradually rising prices.
DXY and gold
Risk-averse investors may also flock to the US dollar. This is measured by the US Dollar Index (DXY), which prices the trade-weighed dollar aginst a basket of six major world currencies: the Swiss franc, the euro, Japanese yen, Swedish krona, British pound, and the Canadian dollar. DXY gained 0.29% on Thursday, January 21, weighing down dollar-denominated assets like gold and silver.
Representative of the mining-based stocks, Kinross Gold Corp. (KGC), Eldorado Gold Corp. (EGO), and Alacer Gold Inc. (ASR-TO) gained on Thursday. These three stocks rose 2%, 1.4%, and 6.7%, respectively, on Thursday. However, the past month has been a crash-filled one for these three mining companies as they saw losses of 20%, 30.7%, and 10.1%, respectively, on a 30-day trailing basis. These three companies together make up 7.9% of the VanEck Vectors Gold Miners ETF (GDX).