In addition to the remarks by the Federal Reserve chair, Janet Yellen, important economic data that came out on Thursday, July 13, also significantly affected precious metals. The Purchaser Price Index (or PPI), which measures the change in the price of finished goods and services sold by producers, stood at 0.1%. It was higher than the forecast 0.0%.
The higher figure is good for the US dollar. The better the outlook for the US dollar, the lower would be the demand for dollar-based assets such as gold and silver.
Unemployment claims came in at 247,000, slightly higher than the forecast 245,000. Higher unemployment claims are negative for the dollar and can also dull the country’s economic outlook.
Volatility and gold
The chart above shows how the overall market environment affects precious metals. The chart compares the Volatility Index (or VIX) (VIXY) (VXZ) to gold (GLD). Volatility and gold are known to move together during turbulent times, such as the economic unrest that occurred at the end of 2015.
The Volatility Index didn’t move much, as there were no market-moving comments from Yellen in the second round of congressional testimony.
The mining-based funds that dropped on July 13 included the Global X Silver Miners ETF (SIL) and the VanEck Vectors Junior Gold Miners ETF (GDXJ). These ETFs fell 1.4% and 1.3%, respectively.
Among these miners in our analysis, Primero Mining has the highest correlation with gold, and First Majestic Silver has the lowest correlation.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.