Precious metals saw a down day
On February 23, gold, silver, and platinum all saw a down day with falls of 0.18%, 0.62%, and 0.06%, respectively. Palladium was the only precious metal to rise with a gain of 0.74% for the day. Platinum and palladium were trading at $999.9 and $1,049.5, respectively. Gold and silver were at $1,328 and $16.5 an ounce, respectively.
Gold witnessed a weekly decline of approximately 1.9% as of February 23, which was its biggest weekly loss in the past two and a half months. Silver and platinum also slumped 1.3% each during the same timeframe. Palladium, however, held a marginal gain of 0.52%.
Revival of the dollar
The loss in precious metals over the past week was likely due to the rebound in the US dollar. The US dollar, depicted by the DXY Currency Index, rose 0.88% during the last week. Often, the revival of the US dollar causes the appeal of gold to diminish. As the precious metals are dollar-based assets, the higher the dollar price, the lower the demand for dollar-based assets like gold, silver, platinum, and palladium.
The above chart shows how the dollar and gold have moved in the opposite direction to each other over the past one month. Over the past one year, the correlation between gold and the DXY Index (UUP) has been -0.59. A correlation of -0.59 indicates that about 59% of the time, gold (GLD) moves in the opposite direction to the US dollar.
The mining stocks that have also witnessed a loss over the past week mainly due to the revival of the dollar and the decline of metals include Yamana Gold (AUY), Coeur Mining (CDE), Pan American Silver (PAAS), and Barrick Gold (ABX). These stocks have fallen 14.5%, 7.1%, 5.9%, and 8.7%, respectively.
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