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How Did Friday’s US Economic Data Affect Gold?

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Economic numbers

The US economic data that came out on Friday, July 15, offered mixed signals for the Federal Reserve’s monetary policy. The US consumer prices rose 0.2% in June—the fourth increase in a row. The retail sales figure was optimistic at 0.6%, marking its third straight strong gain and beating analysts’ expectations of an increase of 0.1%. This news may give some hope to the Federal Reserve members regarding an interest rate hike.

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The optimistic outlook for the US economy may have negatively impacted the bullions. Silver slipped to $20.20 per ounce, and its RSI (relative strength index) reading fell to 74.3. Silver was trading at a premium of almost 19.7% to its 100-day moving average. Such a considerable premium may indicate a pullback in price.

The Fed’s decision

On Thursday, July 14, Federal Reserve policymakers stated there was no hurry to raise interest rates in the wake of the Brexit vote tremors, despite signs of recovery in the US economy. The holdings in the SPDR Gold Shares (GLD), the world’s largest gold-backed ETF, fell 0.25% to 962.9 tons on Thursday. Both GLD and the iShares Silver Trust (SLV) fell on Friday due to the losses in the precious metals. These two shares fell 2.8% and 0.73%, respectively, on a trailing-five-day basis.

Miners that fell

The mining stocks that fell along with the precious metals include Pan American Silver (PAAS), Randgold Resources (GOLD), and Yamana Gold (AUY). These three shares fell 0.94%, 1.5%, and 0.51%, respectively, on Friday. Combined, these three shares make up 10.6% of the VanEck Vectors Gold Miners ETF (GDX).

In the next part of this series, we’ll look at how miners’ stocks have reacted to the attack in France.

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