How Mining Shares and Interest Rates React to Each Other



Miners rebound

Precious metal investors and mining companies have feared a hike in the Fed’s interest rate. Mining stocks saw prices fall in the last quarter of 2016. Global economic turbulence at the start of 2016 set the ball rolling for the haven appeal of gold.

But the fear of a rate hike gripped miners, and they saw their prices fall. The Van Eck Vectors Gold Miners ETF (GDX) reviews the performance of the mining sector in general. We’ve mapped the price changes for a major mining giant, Barrick Gold (ABX). As you can see, 2017 may have some good news for miners.

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Rate hike fear

Going forward, crucial economic numbers from the major countries of the world, including the United States, may have a significant impact on gold and its haven appeal.

Economic numbers from the United States have an impact on the rate hike phenomenon, which in turn plays a significant role in the price determination of gold and other precious metals. The opportunity cost of holding gold increases with a rise in the US interest rate. The Fed has indicated that it will pursue further rate hikes in 2017. That could cause precious metals and mining stocks to fall further.

Due to falling precious metal prices, miners also suffered during the last quarter of 2016. These miners include New Gold (NGD), First Majestic Silver (AG), and Alamos Gold (AGI), which all saw their prices fall.


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