A Close Look at the Descent of Precious Metals in November



Palladium’s going strong

Gold futures for December expiration posted the biggest gain in almost four weeks as the US Dollar Index (or DXY) fell. After touching almost its highest mark in a decade, the DXY, which measures the dollar against a basket of six major world currencies, seemed to be slowly retreating.

Investors are likely betting that the recent sell-off was excessive. Gold’s RSI (relative strength index) was trading below 30 during the six previous trading sessions. An RSI level below 30 is an indicator of excessive selling and suggests the possibility of a rebound in price. Similarly, an RSI above 70 indicates excessive buying and a possible pullback in price.

Among precious metals, palladium reached a 17-month high, trading close to $762 per ounce. That’s the highest level since June 2015. Platinum and silver also had an up day on Monday, November 28, 2016.

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Funds following gold and silver

The fall of precious metals has significantly affected gold and silver funds such as the iShares Gold Trust ETF (IAU) and the iShares Silver Trust (SLV). Price changes in gold and silver can be tracked through these two funds.

The rise in the US dollar after Donald Trump won the US presidential election has played a major role in the fall of precious metals. Trump aims to increase infrastructure spending, which has boosted speculation that interest rates will rise in December 2016, which further takes away the allure of precious metals.

Like precious metals, mining-based stocks have suffered, and their prices have fallen over the past month. Companies that saw falling prices include First Majestic Silver (AG), Kinross Gold (KGC), Eldorado Gold (EGO), and Alacer Gold (ASR).


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