Bullions Retreat as China Returns from Holiday
(Continued from Prior Part)
Gold initially rallied above $1,150
Policymakers in the Federal Reserve meeting minutes seemed unsure and dovish on the rate-hike move. Global economic slowdown and weak data releases seem to be affecting the decision. Ambiguity on the rate-hike may be at its peak.
Gold initially rallied above $1,150, and subsequent sell-off from Asian markets took the lead in determining gold prices, after which gold and silver futures fell.
Gold and silver most actively traded contracts on COMEX, a commodity division of the New York Mercantile Exchange, and have seen profits in the last trading month. Their 30-day trailing profits were 3.5% and 8.1%, respectively.
Owing to the volatile bullion market, precious metals mining giants such as Barrick Gold (ABX), Goldcorp (GG), Sibanye Gold (SBGL), and Silver Wheaton (SLW) have seen falls in prices by close to 50%. Together, these four companies contribute 19.3% to price changes in the Market Vectors Gold Miners ETF (GDX). Above is a price chart that shows a comparative price performance of gold futures with Barrick Gold.
Global economic slowdown
Markets are likely on a watch for US central bank officials’ views on the world economy and its impact on US monetary policy. The Fed thought the economy was close to warranting an interest rate hike in September, but policymakers decided it was prudent to wait for evidence of global economic slowdown.
The US central bank chose not to increase rates in September in the wake of emerging global tumult and fears of a worsening slowdown in China. Federal Chair Janet Yellen mentioned that a rate hike would happen in the current year, but a recent string of weak US economic data has possibly prompted the market to push back these liftoff expectations.
World stock indices edged higher after the release of minutes while the US dollar extended its fall and 10-year US Treasury yields rose. The SPGSCI (S&P Goldman Sachs Commodity Index), which comprises 24 commodities including gold and silver, rose ~1.5% on October 8, 2015.
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