uploads///Gold and SP  Performance

Gold Is on a Winning Streak as Global Markets Slump

By

Jan. 22 2016, Updated 5:28 p.m. ET

Equity slump

Gold futures traded on COMEX rose 1.6% on Wednesday, January 20, 2016, as the global stock markets plummeted. Unrest in the stock markets often pushes gold higher. Fears once agin gripped the markets as China’s Shanghai Composite Index fell 1% and Europe’s Stoxx fell 3.2%. The Dow Jones Industrial Average gave up 565 points during the early trade hours on Wednesday but recovered after that. Investors seem to be in panic mode, as they are moving away from equity investments and jumping into safer investment classes like gold and silver.

The below chart shows the inverse relationship between gold and the equity markets, tracked by the S&P 500 performance, over the past 15 years.

Article continues below advertisement

Miners rise

Gold futures closed at $1,106.2 per ounce after hitting the high of $1,109.9 per ounce. The implied volatility on gold also rose to 15.8% from the close at 14% levels seen the day before. Gold prices are still trading below their 100-day moving average price, which has risen to $1,108.1 per ounce.

The stock market slump not only buoyed precious metals but also the mining companies that usually follow gold. Mining stocks like Primero Mining (PPP), New Gold (NGD), and Newmont Mining (NEM) surged 5.9%, 8.3%, and 1.5%, respectively, on Wednesday. These three stocks together make up 8.3% of the VanEck Vectors Gold Miners ETF (GDX). The GDX indicator itself rose 3.1% on the same day but has a five-day-trailing loss of 5.1%. The most famous gold-based ETF, the SPDR Gold Shares (GLD), gained 4% during the past one month and is trading at $105.5 per share.

Advertisement

More From Market Realist

  • Open sign on a sidewalk
    Macroeconomic Analysis
    Top Reopening Stocks to Play the Shifting Market Sentiment
  • Morgan Stanley sign and stock numbers
    Macroeconomic Analysis
    Morgan Stanley's Buyback Stock Picks in 2021
  • Black Wall Street sign is sign of ethical investing
    Macroeconomic Analysis
    Ethical Investing Stocks and Funds for Your 2021 Portfolio
  • New York City skyline and Goldman Sachs logo
    Macroeconomic Analysis
    Goldman Sachs: Options Trade Picks to Play Earnings Season Volatility
  • CONNECT with Market Realist
  • Link to Facebook
  • Link to Twitter
  • Link to Instagram
  • Link to Email Subscribe
Market Realist Logo
Do Not Sell My Personal Information

© Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.