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Will Deutsche Bank’s Doldrums Have a Lasting Effect on Gold?

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Deutsche Bank’s doldrums

Much of the market’s movement on September 30, 2016, was dependent on the Deutsche Bank scenario. Deutsche Bank’s price slumped to a record low after Bloomberg reported that trading clients had withdrawn their excess cash and positions from the large German lender.

This new gave negative momentum to the overall US equity market and the Asian market on the day. The sloppiness of this giant equity share easily spread across the market.

Turbulence in equity markets often gives support to the haven appeal of precious metals, especially gold. Gold touched a high of $1,331.5 on September 30. However, the firm US dollar held precious metals back, causing end-of-day losses.

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Miners and funds impacted

As shown in the chart above, there’s a prevailing negative sentiment on gold. Gold fell 1.8% on September 30, and silver also fell 2.1% on the day. The funds following these two crucial valuable metals, the iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV), have seen trailing-five-day falls of 1.6% and 2.6%, respectively.

Mining equities often take much of their movements from precious metals rather than from the overall stock market. The mining shares that were among the top losers on September 30 included Aurico Gold (AUQ), Yamana Gold (AUY), Pan American Silver (PAAS), and Silver Wheaton (SLW). These four companies fell 2.8%, 2.7%, 2.3%, and 2.2%, respectively, on the day. Combined, these three miners make up about 11.3% of the fluctuations in the VanEck Vectors Gold Miners (GDX).

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