How Precious Metals Reacted to GDP Numbers


Jan. 3 2018, Updated 2:02 p.m. ET

Precious metals surge

All four precious metals saw an up day on Tuesday, December 26, 2017. Gold futures for January expiration were up 0.67% to close at $1,285.5. Spot gold was at $1,283.3 per ounce. Silver rose almost 1% and gave a close at $16.6 per ounce. Platinum increased 0.05% to end the day at $923.5 an ounce. Palladium was the winner among precious metals on Tuesday with a rise of 1.2% to end at $1,055.2 an ounce.

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Lower-than-expected GDP

Changes in precious metals are mainly dependent on general economic sentiment in the US. The final GDP came in at 3.2%, which was lower than the forecasted figures of 3.3%. GDP is a measure of the annualized change in the inflation-adjusted value of all goods and services produced by the economy. When the actual is greater than the expected, it is good for the economy, and vice versa. In the past two years, the final GDP number has always outperformed analyst expectations.

Funds and miners

The better the economic numbers, the worse it is for precious metals, as their haven bids are negatively impacted. Similarly, underperformance in an economic indicator could spur demand for havens like gold and silver. The iShares Gold Trust (IAU) and the iShares Silver Trust (SLV) increased 0.57% and 1.2%, respectively.

Among the mining stocks that joined the precious metals in their price revival are Pan American Silver (PAAS), Newmont Mining (NEM), New Gold (NGD), and AngloGold Ashanti (AU). They increased 0.38%, 1.8%, 2.1%, and 2.2%, respectively, on Tuesday. Combined, these four account for about 13.6% of the VanEck Vectors Gold Miners Fund (GDX).


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