Why Silver Is Outshining Gold in April 2016

Gold prices ticked higher for a third straight day on April 27, 2016, maintaining gains after the FOMC (Federal Reserve Open Market Committee) expressed its stance on the US interest rate dilemma. As expected, Fed members kept the interest rate unchanged, thus buoying non-yield bearers like gold and silver.

Gold jumped by 0.56% and touched its highest mark of $1,254.6 per ounce on Wednesday, April 27, 2016, and then closed at $1,240.7. But Silver climbed by almost 1.1% and closed at $17.3 per ounce. This is the highest close for silver in 11 months. Silver has been running ahead of gold in the past month, booking gains of 14.5% while gold only managed 3.2% on a 30-day trailing basis as of April 27.

Platinum and palladium also climbed by 0.51% and 0.85%, respectively, on Wednesday, April 27. Commodities are all dollar-denominated assets and often rally due to the fall in the US dollar.

Mining companies were also relieved by the continued low rate of interest. Among the top performing miners on Wednesday were First Majestic Silver (AG), Alamos Gold (AGI), and Gold Fields (GFI), which saw increases of 3.3%, 4.4%, and 3%, respectively, on Wednesday. Together, these three companies contribute approximately 5.4% of the price fluctuations in the VanEck Vectors Gold Miners ETF (GDX).

Funds that were also quick to bounce include the leveraged Direxion Daily Gold Miners Fund (NUGT) and Direxion Daily Junior Bull Gold 3X (JNUG), which rose by 3.2% and 2.3%, respectively, on Wednesday, April 27.

Now let’s look at the recent role of the US dollar.