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.