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Precious Metals React to the Dollar’s Slump

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Precious metals

In this series, we’ll look at gold price movement leading up to significant news in the metal market over the past week, specifically the end of the Indian jewelers’ gold strike and news of yuan-denominated gold. The precious metal rally that began on Monday, April 11, slowed down the next day. Although gold, silver, and platinum maintained gains on Tuesday, the gains were lower than on the previous trading day. These three metals rose 0.23%, 1.5%, and 0.9%, respectively. Palladium, however, fell marginally by 0.25%.

Gold touched its strongest mark of $1,264.7 per ounce on Tuesday, April 12. This was gold’s highest price in the past three weeks. Gold has been trading around $1,240 per ounce. Physical demand continues to be extremely low.

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The gains in the precious metal were related to the losses seen in the US dollar. The US Dollar Index (DXY) prices the dollar against a trade-weighted basket of six major world currencies. The losses in the US dollar were most likely due to the scaled-back expectations of interest rate hikes by the Federal Reserve.

Precious metals and related funds

DXY has lost about 1.7% on a trailing-30-day basis. Gold has fallen 1.4% during the same timeframe. Silver and platinum, however, have risen 2.9% and 2.1%, respectively. Platinum touched its highest mark of $1,005 on Tuesday, April 12, and closed the day at $999.70 per ounce, which was its highest closing price in a month.

Strength in the equity markets often weighs on the bullions, as the safe-haven demand diminishes as other assets rise.

The fluctuations in the precious metals market are reflected in the Global X Silver Miners ETF (SIL), the Sprott Gold Miners ETF (SGDM), the iShares MSCI Global Gold Miners ETF (RING), the VanEck Vectors Gold Miners ETF (GDX), and the SPDR S&P Metals and Mining ETF (XME). These five funds have risen 64.6%, 68.3%, 80.1%, 66.8%, and 46%, respectively, on a year-to-date basis.

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