Revival of precious metals
Gold prices edged higher once again on Friday, February 3, 2017. On February 2, gold touched $1,219.40 per ounce, its best price since November 2016. Gold had a weekly gain of almost 2.4%, making the last week gold’s best week in the past six months.
Global economic turbulence has played an important role in lifting precious metal prices in January 2017. The Trump-led market turmoil has added to the overall risk environment, which usually buoys haven assets such as precious metals.
The performance of these metals can be tracked through investments in precious metal–based funds such as the iShares Gold Trust ETF (IAU) and the iShares Silver Trust ETF (SLV). These funds have also seen reasonable gains in January due to the revival of risk sentiment.
The above chart shows the rebound in gold and silver in January 2017 after the fall in November and December 2016. The rising interest rates in the US also contributed to the fall in non-yield-bearing assets such as previous metals.
The January revival in precious metals also spread to most of the mining companies, including Barrick Gold (ABX), Goldcorp (GG), Alamos Gold (AGI), and First Majestic Silver (AG). Together, these four miners contribute ~15.8% to the fluctuations in the VanEck Vectors Gold Miners ETF (GDX).
Investors are further looking for clues from the Trump presidency, which can decide the stance of the economy and thus, price movements in precious metals. As the level of uncertainty rises, the demand for the risk-mitigating assets also rises.