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Which Indicators Are Playing Precious Metals?

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Precious metal movements

Besides geopolitical issues, the US dollar has also been playing an important role in the determination of the price movement for precious metals. These metals are all dollar-denominated assets, so they often have their prices influenced by the dollar. Gold fell on Monday, September 25, 2017.

However, gold futures for October expiration were slightly higher than the previous day’s close. Silver and platinum also followed the same trend as gold and were 0.96% and 0.87% higher for the day, respectively. Palladium was trading lower by 1.1%.

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Dollar assets

The above chart shows us how the US dollar (UUP) has been a crucial element in determining where gold (IAU) and silver (SLV) could move. Since they are dollar-denominated, investors from other countries have to first invest in the dollar. A higher dollar deters investors from gold and silver and other assets that require dollar buying.

Similarly, a fall in the dollar lures investors toward these dollar-denominated assets. The last week has been beneficial for the dollar, and gold has seen a second weekly fall in price. If the Fed decides to hike the interest rate in 2017, that could also have a positive impact on the dollar.

Among the other currencies, the euro fell on Monday after German Chancellor Angela Merkel won a fourth term in a weekend election.

The fluctuation in currencies has a major role in determining the prices of mining shares such as Newmont Mining (NEM), Eldorado Gold (EGO), Pan American Silver. (PAAS), and First Majestic Silver (AG).

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