The second day in a row for gold losses
Precious metals on Monday, January 11, 2016, had a hard day—similar to the previous trading session. This represents the first time in 2016 that gold has seen two consecutive sessions of price drops. Gold futures for February 2016 expiry fell by a marginal 0.02%, closing the day at $1,096.2 per ounce. Gold’s high was $1,108 on January 11.
Meanwhile, silver future prices for March 2016 expiry retreated, closing about 0.04% lower than the previous day at $13.8 per ounce. Silver touched a high of $14.08 on the same day.
This came on the heels of the first week of 2016, after strong headwinds sent by Chinese markets to worldwide stock markets, when precious metals like gold and silver soared. Gold rose by about 1.7% during that week, whereas silver retreated 0.83% during the same time frame. Concerns over the global economic turmoil—concerns fueled both by the Middle East conflict between Saudi Arabia and Iran and by the North Korean hydrogen bomb tests—lifted up the store of value demands in gold and silver.
Precious metal miners bear the brunt
The stabilization of equity markets in the US compared to the outrageous routing prices observed during the first week of 2016 made precious metals lose their luster, which resulted in a fall in prices on Friday, January 8, and Monday, January 11. Also, stronger payroll numbers gave a boost to the US economy, providing support for the US Federal Reserve’s decision to raise the federal funds interest rate further in 2016. The higher rate so far has curbed the appeal of precious metals as a haven investment, which caused the recent plunge.
This fall in precious metals was also felt by mining-based ETFs like the Sprott Gold Miners (SGDM) and Global X Silver Miners ETF (SIL), which fell by 4.5% and 3.9%, respectively, on Monday, January 11. The particular mining stocks that fell hardest include Royal Gold (RGLD), IamGold Corporation (IAG), and Primero Mining Corporation (PPP), which retreated by 11%, 8.9%, and 8.6%, respectively, on the same day.
Together these companies make up about 6% of the price changes in the VanEck Vectors Gold Miners ETF (GDX). Now let’s take a more in-depth look at the status of gold worldwide as of January 11.