What Global Factors Drive Precious Metals



UK election

Last week, safe-haven bids were spurred and precious metal prices surged. The attack in London the weekend prior and the UK elections affected precious metals.

Hedge funds and money managers had poured money into gold for two straight weeks, boosting it to its highest level in nearly a month. As of June 8, gold and silver had risen 0.73% and 0.77%, respectively, over the previous five trading days. The higher bids for gold and silver also helped the SPDR Gold Shares ETF (GLD) to rise to 851 tons.

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Volatility and gold

As the UK’s election day approached, all four precious metals were trading higher. However, they slowly moved down as concerns reduced. Gold, as we know, may react to overall market volatility (VIXY). As shown in the above chart, both gold and volatility have risen. Market risk boosts haven bids.

The European Central Bank’s meeting and former Federal Bureau of Investigation director James Comey’s Senate testimony were among other factors that played on precious metals and mining shares.

Mining stocks that had a bright week were AngloGold Ashanti (AU), Kinross Gold (KGC), Hecla Mining (HL), and Coeur Mining (CDE), which had risen 7.5%, 3.3%,4.6%, and 6%, respectively, on a five-day trailing basis. The SPDR Gold Shares ETF (GLD) and the iShares Silver Trust ETF (SLV) increased 0.85% and 0.61%, respectively, on a 30-day trailing basis.


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