The US dollar, depicted by the DXY Currency Index, was also behind the increase in gold prices on Thursday. The DXY Index has been rising over the past one month and has a 30-day trailing gain of almost 2.6%. The index measures the dollar against a basket of six major world currencies. The dollar fell against the yen as China trade data spooked investors, but it did continue its advance against the pound.
The possibility of a delay in the rate hike set dollar prices rolling. However, the index managed yet another gain of 0.29% on Thursday, October 13. Most of the strength in the index over the past few days was due to the better-than-expected economic numbers in the United States. The overall economic sentiment also plays on the US dollar. Positive economic news boosts the dollar, while negative news sets it falling.
A weak dollar boosts precious metals, and when the dollar strengthens, precious metals rise. The fall in precious metals over the past month has been driven by the Federal Reserve’s interest rate sentiments and the increasing strength of the US dollar.
Weakness in the US dollar is also a boon for dollar-denominated assets, making them cheaper for buyers that use other currencies. The rise in the dollar works the opposite way.
The Sprott Gold Miners (SGDM) and the iShares MSCI Global Gold Miners (RING) have fallen 11.9% and 9%, respectively, on a 30-day-trailing basis. The prices of precious metals have wavered between gains and losses over the past month. Many miners such as Newmont Mining (NEM), New Gold (NGD), First Majestic Silver (AG), and Goldcorp (GG) have fallen.