Commodity Blog

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Fundamentals Suggest No Need for Haven, Precious Metals Dip

July 24, 2014 at 22:35 by Vladimir Vyun

Gold and silver plunged today as positive macroeconomic indicators from around the world suggested that there is no need for safe haven assets. Meanwhile, industrial metals profited from the news. Reports from the United States, Europe and China were mostly good, increasing risk appetite among investors. Speculators tend to seek assets with higher yield during times of growth, leaving safer ones for times of economical and geopolitical troubles.

Positive data from the USA is especially detrimental for precious metals as it gives incentive for the Federal Reserve to start raising interest rates sooner. Unprecedentedly loose monetary policy elevated gold in the previous years, and monetary tightening will likely hurt the metal’s performance. Moreover, signs of US economic growth boost the dollar, putting additional pressure on the precious metal markets.

December futures for delivery of gold plunged 1.1 percent to settle at $1,292.70 per troy ounce on COMEX today. September silver tumbled as much as 2.8 percent to $20.415 per ounce.

If you have any questions and comments on the commodities today, use the form below to reply.

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