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Gold and Silver Retreat, Taking Down Miners and Funds

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Tumbling precious metals

On Tuesday, January 9, 2018, the price of gold declined again. Gold futures for January expiration fell 0.52%, and gold ended the day at $1,311.70 per ounce. The RSI (relative strength index) level also fell with the decline in the price of gold. The RSI level was 86.3.

Silver and platinum followed gold, falling 0.75% and 0.45%, respectively. Silver was trading at $16.90, and its RSI reading was 77.5. There could be a chance that the prices of these two metals will fall further since an RSI level above 70 is an indication of a possible downward reversion in price.

Funds and miners join the retreat

The fall in these precious metals also took down precious metal–based funds, including the iShares Gold Trust (IAU) and the iShares Silver Trust (SLV), which fell 0.47% and 0.74%, respectively, on Tuesday, January 9, 2018. They also have five-day trailing losses of 0.32% and 1.1%, respectively.

The giant mining-based stocks have also fallen due to the decline of precious metals. Barrick Gold (ABX), Sibanye Gold (SBGL), Gold Fields (GFI), and First Majestic Silver (AG) fell 1.2%, 0.96%, 0.48%, and 2.3%, respectively. These four funds together contribute 13.7% to the price changes of the VanEck Vectors Gold Miners ETF (GDX).

The market is carefully eyeing the economic numbers that could decide the potential move by the Federal Reserve. The Fed’s decisions have a close connection with gold and other precious metals. In the next part of this series, we’ll give a brief explanation of the Fed’s relationship to gold. We’ll also analyze the dollar’s play on gold.

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