How Turbulence in the Market Has Moved Precious Metals

Often, gold, silver, platinum, and palladium react to the overall risk in the market.

Meera Shawn - Author

Dec. 5 2017, Updated 5:30 p.m. ET

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Gold and unrest

So far, we’ve looked at how the dollar plays on gold and the Fed’s decision to hike the interest rate. Another crucial factor that has been playing on precious metals is the overall market volatility. Often, gold, silver, platinum, and palladium react to the overall risk in the market. These metals often rise when investors’ risk appetites fall. If we look at historical events such as wars, political unrest, economic crises, and other major happenings, gold and silver have risen.

Gold is a safety asset that surges as market turbulence increases.

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The Flynn issue

On Friday, December 1, 2017, gold rose briefly on news that former National Security Advisor Michael Flynn admitted to lying to the FBI. It also had a negative impact on the equity markets.

When the Senate passed its tax reform bill early on Saturday, December 2, 2017, market sentiment and equities rebounded on Monday, December 4. The 1.2% initial surge in gold subsided, giving only marginal gains for the metal.

The VanEck Vectors Gold Miners ETF (GDX) and the ETFS Physical Silver (SIVR) have fallen 1.2% and 0.56%, respectively, on a 30-day trailing basis. Mining shares with 30-day trailing losses include Royal Gold (RGLD), New Gold (NGD), AuRico Gold (AUQ), and Sibanye Gold (SBGL). They’ve fallen 4.6%, 6.4%, 15.1%, and 5.6%, respectively.


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