Precious Metals Are Keeping an Eye on the US Dollar



The dollar and precious metals

The depreciating US dollar initially helped boost the price of precious metals. Gold and silver have climbed almost 16.5% and 16.9%, respectively, on a year-to-date basis. The haven bids gripped the precious metals markets, and investors opted for precious metals as China weakened and equity markets tumbled.

The rout in crude oil markets was another element that helped lift up gold and other precious metals. The DXY measures the US dollar against a basket of trade-weighted currencies including the euro, the yen, the pound, the Canadian dollar, the krona, and the franc. The index has plummeted almost 3.9% on a year-to-date basis.

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Silver’s industrial side

However, in the past one week, the dollar has been on a winning streak and has increased 0.86% on a five-day trailing basis. During the same timeframe, gold prices depreciated 1.7%. Silver gained alongside the rise in the equity markets. It seems that silver is more tilted to its industrial side currently as opposed to its precious metal side. Silver increased 1.3% on a five-day trailing basis.

The rises and falls in precious metals impact mining ETFs like the Global X Silver Miners ETF (SIL) and the VanEck Vectors Junior Gold Miners ETF (GDXJ). These two funds have increased 64.3% and 69.1%, respectively, on a year-to-date basis.

The mining shares that also celebrated the rise in gold and silver include companies like Pan American Silver (PAAS), AngloGold Ashanti (AU), and Agnico-Eagle Mines (AEM). These three companies have risen during the past one trading month despite the rise and fall in precious metals. These three funds rose 18.6%, 10.2%, and 6.4%, respectively, on a 30-day trailing basis. Together the three companies make up 11% of the VanEck Vectors Gold Miners ETF (GDX).


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