As we know, precious metals are closely tied to movements in US interest rates. Bonds and equities are both yield-bearing assets, so a rise in yields often causes a slump in demand for assets such as gold and silver, which don’t bear any intermediary cash flows. The 10-Year US Treasury Yield (IEF) has hit its highest point since March 2017 at 2.6%. There’s a chance that this rise could leave a negative impact on gold and other precious metals going forward.
When the Federal Reserve lifted the interest rate for the first time in a decade in December 2015, precious metals prices slumped. Gold and silver funds, including mining funds (SGDM), also retreated. The same was the case for the mining companies.
View of the Fed
There has been speculation in the market that the FOMC (Federal Open Market Committee) will raise the interest rate three or four times in both 2018 and 2019. This was also the view taken by the Cleveland Federal Reserve Bank’s president, Loretta Mester, on January 18, 2018.
The consumer sentiment metric that came out on January 19 was 94.4, lower than analysts’ expectation of 97. Consumer sentiment data measure the level of a composite index based on surveyed consumers. The higher the number, the better the forecast is for the economy.
Among the mining shares that retreated on January 19 despite the rise in the prices of the precious metals are Wheaton Precious Metals (SLW), Franco-Nevada (FNV), Alacer Gold (ASR), and Harmony Gold (HMY). These stocks fell 1.5%, 3%, 0.44%, and 1.2%, respectively.
In this article, we'll focus on miners' moving averages and relative strength index (or RSI) readings.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.