Gold futures are plunging as much as 2% in the middle of the trading week as a rising stock market and a rebounding US dollar weigh on metal commodities. Gold and silver prices had been rallying for the last four sessions, but they have since plummeted on a multitude of factors, including profit-taking.
December gold futures crashed $30.30, or 1.53%, to $1,948.60 per ounce at 15:17 GMT on Wednesday on the COMEX division of the New York Mercantile Exchange. Gold is coming off its first monthly loss since March, but the yellow metal is still up more than 28% year-to-date.
Silver, the sister commodity to gold, is also cratering midweek. December silver futures tumbled $1.065, or 3.72%, to $27.58 per ounce. The white metal has been on a tear since hitting the bottom of $11 earlier this year, rallying more than 54% so far this year.
Many retail investors might be wondering what happened throughout two trading sessions.
A crucial factor is a rallying greenback. The US Dollar Index, which gauges the buck against a basket of currencies, advanced 0.49% to 92.79, from an opening of 92.28. A stronger greenback is bad for commodities priced in dollars because it makes it more expensive for foreign investors to acquire. That said, the dollar is still down close to 4% YTD.
The other factor is that the broader financial market is climbing, with the leading stock indexes in the green. Robust economic data in the US, Europe, and China added to the gains in the equities arena and chopped away at the precious metals’ gains. Overall, investors’ recovery hopes continue to rise amid positive developments in the vaccine front.
However, with the Federal Reserve guaranteeing inflation and promising low interest rates for the foreseeable future, the consensus is that gold and silver prices will hit $2,100 and $30, respectively. A low rate environment is bullish for non-yielding bullion since investors cannot earn a higher yield.
In other metal markets, November copper futures fell $0.016, or 0.53%, to $3.0125 per pound. November platinum futures declined $42.00, or 4.41%, to $910.70 an ounce. November palladium futures cratered $44.50, or 1.93%< to $2,226.60 per ounce.