Seven days of losses for gold
Gold futures for June expiration saw another day of losses, falling by ~$4 and closing at $1,222.7 per ounce on May 26, 2016. However, gold’s fall didn’t extend to other precious metals. Though gold fell by 0.28% on May 26, silver, platinum, and palladium saw rises of 0.51%, 0.1%, and 2.5%, respectively, on the day.
Precious metals have all seen price falls over the past week. Gold’s monthly returns are negative. Since the beginning of 2016, May has been the worst month for precious metals, most likely due the stronger US dollar. The strength of the US dollar often weakens dollar-denominated assets, since it’s more expensive for the buyers with other currencies to invest in the dollar for the purchase of dollar-based assets.
The fear of a Federal Reserve rate hike has also been playing strongly on gold and other precious metals. The latest hawkish comments by the Fed sparked fears of a summer rate hike, which would negatively impact non–interest bearing assets. Followers of gold are likely keeping a close eye on the stance of the economy for further direction on the precious metal.
The above graph shows the long-term relationship of gold with the 10-Year Treasury yield.
Funds, miners plunge
The falls in the precious metals for the reasons discussed above have impacted precious metals–based funds such as the SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV). These two funds fell by 2.7% and 0.89%, respectively, on a five-day-trailing basis.