Fed chair appointment
Precious metal’s futures had down day, for the most part, on Thursday, October 26. Gold futures for November expiration were 0.74% lower, while silver for December futures fell 0.67%, and platinum for December expiration sank 0.55 lower. Palladium scaled 1%, however, and has seen YTD gains of 41%.
The drop in most precious metals last Thursday was most likely due to the revival of the US dollar, which rose 0.96% that day, likely on the news of the man whom the Trump administration plans to appoint as the new Federal chair.
The US dollar has seen a 30-day gain of 1.8%. Market experts were expecting that John B. Taylor, one of the candidates for Fed chair, might raise the interest rate at a faster pace than earlier expected, which could be beneficial for US bonds and the US dollar.
A hike in the federal funds interest rate is positive for the domestic currency because more and more investors would be prompted to invest in higher yield-bearing assets, thus increasing the demand for the dollar. The higher the demand for the dollar, the lower the demand for dollar-based assets like gold and silver would be.
But a drop in precious metals is often negative for the mining funds and shares. The gold- and silver-based iShares Gold Trust (IAU) and iShares Silver Trust (SLV) fell 0.90% and 1%, respectively, on Thursday, October 26.