Precious metal movement

Gold prices retreated from their four-month high of $1,340 and slipped 0.81% on Wednesday, January 17. Gold futures for January expiration ended the day at $1,338 per ounce. Silver also declined about 1.1% and closed at $17.1 per ounce. Palladium was up almost 1.9% on Wednesday, trading at $1,118. The metal hit its record high of $1,138 an ounce on Monday and retreated later. Platinum was up marginally by 0.15% and closed at $1,000.5.

What Led to the Decline in Gold and Silver?

Dollar’s impact

The US dollar rose about 0.16% on the same day. Precious metals have been closely associated with the US dollar and are reacting more closely to it. A rise in the dollar often leads to a decline in the metals and vice versa. On a five-day trailing basis, the dollar has dropped 1.9%, while gold has increased 1.6% during the same time. On a 30-day trailing basis, the dollar lost 3.6%, while gold and silver rose 6.7% and 7.1%, respectively.

Yield association

The adverse reaction of precious metals could have also been due to the revival of the two-year yields as the bond prices fell. The yield was above the 2% level, the highest level witnessed since the Lehman Brothers’ crash in September 2008.

The SPDR Gold Shares (GLD) and the iShares Silver Trust (SLV) were also trading lower. They fell 0.81% and 1.2%, respectively, on Wednesday. They have a seen a rise in their price of 2% and 0.44%, respectively, on a 30-day trailing basis.

Some mining stocks that also followed the slump in precious metals are B2Gold (BTG), Sibanye Gold (SBGL), Gold Fields (GFI), and Agnico Eagle Mines (AEM). They were down 1.6%, 5.6%, 1.2%, and 0.98%, respectively.

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