Rising Equities Put a Dent in Gold



Gold loosens up

Gold futures for April delivery retreated 0.15% on Friday, January 22, 2016. The strength gained by the equity markets weighed down gold’s haven appeal that had raised the price of gold since the beginning of the year. Risk-aversion was likely fueled by the markets.

Oil toppled to its 12-year low, and equities joined in. Investors flocked to haven assets like Treasuries and gold, which raised their prices. However, a rebound in oil prices buoyed stocks and put a dent in gold. Gold closed at $1,096.30 per ounce after touching a low of $1,094.1 per ounce on January 22. It reached a high of $1,103.20 that day, as you can see in the graph below.

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Other precious metals

The fall in gold and its loss of haven appeal also extended to silver. Silver fell 0.26%, closing at $14.30 per ounce on January 22. Platinum and palladium, however, rebounded 1.5% and 0.89%, respectively, that day. The crushing prices of these two precious metals were most likely due to the slump in the stock market and their high industrial usage. Platinum and palladium futures closed at $831.60 and $499.90 per ounce, respectively.

The SPDR Gold Shares (GLD) rose to 1.8 metric tons on Thursday, January 21, 2016, which aggregated the week’s inflow of 4.2 metric tons for the week. The overall rise and fall in gold prices have also affected mining-based companies.

Goldcorp (GG), Royal Gold (RGLD), and New Gold (NGD) rose 3.3%, 2.5%, and 2.5%, respectively. These companies make up 14.1% of the VanEck Vectors Gold Miners ETF (GDX), which rose 0.93%.


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