Precious metal reaction
Thursday, November 2, 2017, was an up day for gold, but silver, platinum, and palladium continued to fall. They fell 0.23%, 0.94%, and 0.42%, respectively, that day. Gold closed at $1,278.10 per ounce. Much of the movement in precious metals over the past month has been determined by the Fed indicators and the US dollar.
The US dollar has risen 1.2% during the last 30 trading days. It’s often expected that changes in the dollar could reciprocate in precious metals. Because gold, silver, platinum, and palladium are all dollar-based assets, the declining dollar means a rather cheap currency for investors from other countries. So the demand for dollar-based assets could rise. Similarly, the increase in the dollar (UUP) could reduce the lure of these dollar-denominated assets.
Dollar changes are largely based on the overall sentiment in the United States. As the country decides to raise interest rates, there’s more of a chance that investors around the globe could start pouring money into U.S. Treasuries, causing the US dollar to rise.
That could have a negative impact on precious metals. And let’s remember that a higher interest rate could also hurt non-yield bearers.