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Are Precious Metals Slowly Retreating?

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Jul. 22 2016, Published 9:44 a.m. ET

Is the rally slowing down?

Gold futures were steady on Tuesday, July 19, 2016. Losses from the previous day were reversed, but only a little. Gold rose a marginal 0.2%. The haven appeal of precious metals seems to be waning. The Market in the United States logged record highs amid hopes that US corporate earnings were gaining ground.

Gold futures for August expiration closed at $1,132.30 per ounce on July 19. Silver, however, fell only marginally. Platinum fell a little with silver, but palladium rose with gold. Silver, platinum, and palladium closed at $20, $1,098.60, and $656.40 per ounce, respectively, on Tuesday.

The reason behind gold’s tremendous rise so far this year is haven bids. Gold has surged almost 25%, and silver has risen 42.5% year-to-date. Silver certainly got a boost from haven bids as well as industrial demands.

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Tracking funds and miners

After substantial gains over the last month, precious metals seem to be exhausted. Precious-metal-based funds such as the iShares Silver Trust (SLV) and the SPDR Gold Shares (GLD) have risen 15% and 5.3%, respectively, in the past month. Most of these gains are attributed to the Brexit vote.

Precious metal miners that were top performers in the past month include AngloGold Ashanti (AU), Hecla Mining (HL), and Coeur Mining (CDE). They rose 33.3%, 30.5%, and 41.4%, respectively, in the past 30 trading days. Together, they contribute 6.4% to the fluctuations in the VanEck Vectors Gold Miners ETF (GDX).

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