Gold versus the market
The equity markets represent another important phenomenon that has closely impacted the fluctuations in precious metals. Precious metals often deviate from stock markets, which can be a litmus test for investor confidence.
The higher the investor confidence level, the greater investors’ appetite for risk could rise. In this environment, they could seek out assets such as equities instead of haven assets like gold and silver. The chart below shows the performance of gold (IAU) and silver (SLV) against global stock markets, which are tracked by the iShares MSCI World ETF (URTH).
US equity markets saw new record highs on Monday, which also positively impacted the Asian markets. The European markets also increased, led by Portuguese stocks as Lisbon’s credit rating was upgraded to investment grade for the first time in five and a half years.
Despite the ongoing negative sentiment for precious metals amid performing markets, the SPDR Gold Shares ETF (GLD) had expanded 4.2 tonnes during the week ended September 15. During this week, there was an outflow of 839 tonnes. According to CTFC[1. U.S. Commodity Futures Trading Commission] data, hedge funds and speculators grew bullish on silver prices during the week.
The miners that experienced the greatest losses during the past five trading days were IamGold (IAG), Silver Wheaton (SLW), Goldcorp (GG), and Primero Mining (PPP). These miners fell 7.5%, 6.0%, 6.2%, and 57.5%, respectively. Primero Mining’s decline is due to company-specific factors.