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In What Direction Are Precious Metals Headed?


Dec. 12 2017, Published 9:49 a.m. ET

Precious metals movement

Among the four precious metals, silver was the only one that rose on Friday, December 8, 2017. Silver futures for February expiration rose 0.22% for the day, ending at $15.80 per ounce. Gold, platinum, and palladium fell 0.39%, 1.2%, and 0.65%, respectively, that same day. Gold futures for January expiration closed at $1,246.50 per ounce.

All four precious metals have fallen over the past five trading days. Gold, silver, platinum, and palladium fell 2.6%, 3.5%, 6.1%, and 1%, respectively. It was the third straight week of decline for gold.

The chart below shows the performance of gold (IAU) and silver (SLV) in 2017.

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Geopolitical events

Major geopolitical events can also determine many of the changes in precious metals. Last week, President Trump stated that the United States recognizes Jerusalem as the capital of Israel, which could have given some potential boost to gold, but it didn’t. Many analysts expect major political events like this to give support to gold since it’s famous as a safety asset.

Investors were also expecting a US tax reform bill to pass and a temporary extension of US government funding. Tax reform has given a lot of support to the dollar over the past few weeks. In the next part of this series, we’ll look at the relationship between gold and the dollar.

Major mining companies Coeur Mining (CDE), First Majestic Silver (AG), Alamos Gold (AGI), and Pan American Silver (PAAS) rose 1.6%, 3.3%, 2.8%, and 1.6%, respectively, on Friday, December 8. These stocks make up 3.7% of the VanEck Vectors Gold Miners ETF (GDX).


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