uploads///SPDR Gold Shares GLD Fund Flow

Analyzing the Performance of Precious Metal Funds

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Sep. 9 2016, Published 1:25 p.m. ET

Precious metal funds

Precious metals have seen a remarkable rally in 2016 due safe-haven bids that extended to precious metals. The Brexit vote caused investors to jump to precious metals like gold and silver. However, previous metals’ rally lost momentum starting in mid-July. Improving data bolstered expectations that the Fed would hike the interest rate offered on Treasuries sooner than expected.

The amount of money flowing to gold fell. Funds like the SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) suffered. These two funds have negative 30-day trailing returns. However, they have a five-day trailing gain of 2.3% and 5.1%, respectively.

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Reduced fear of a rate hike

As these funds rose over the past week, precious metals also rose. Money started flowing into these gold and silver funds.

The economic data that came out on September 2 gave precious metals some relief. The weaker-than-expected US jobs data cut expectations that the Fed will raise interest rates in the current month. As the above chart shows, the fund flows to GLD—the most prominent gold-based fund—drastically increased over the past week.

The mining shares also saw considerably good returns. Companies like Coeur Mining (CDE), Primero Mining (PPP), and Silver Wheaton (SLW) have a five-day trailing rise of 16.3%, 14.7%, and 14.1%, respectively. These three companies combined account for 6% of the fluctuations in the VanEck Vectors Gold Miners Fund (GDX). Giant miners such as GoldCorp (GG) and Barrick Gold (ABX) also saw their prices fall.

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