A Pre-Thanksgiving Precious Metals Nosedive

The day before Thanksgiving is usually a quiet day for financial markets, but precious metals have all taken significant dips today, with gold falling below $1,200. What has shaken up the markets at this unlikely time? Several main factors are currently influencing the prices of precious metals.

A Strong Dollar

The US dollar has reached a more than 13-year peak, with data showing that our economy is on track for steady growth. This has reinforced the expectations that the Federal Reserve is likely to raise interest rates during next month’s meeting. Additionally, the dollar reached a seven-month high as compared to the Chinese yuan. It has also climbed to its highest level as compared to the euro since early December.

Durable Goods Orders

The durable goods orders report was released today and it was much stronger than expected, which affected currencies, metals, and bonds. In October alone, US durable goods orders increased by 4.8 percent (which translates to about $11 billion), after being expected to rise by less than three percent. This report has shown four consecutive months of growth, largely in part to the demand for commercial aircraft.

Jobless Claims

Jobless claims data, which documents the number of people who filed for unemployment insurance for the first time, has increased this week to reach 251,000. This marks 90 consecutive weeks of claims below the 300,000 mark, the longest streak since 1970. So even with a gain this week, the data continues to show strength in the labor market.

A strong economy in which the dollar is rising often contributes to decreasing metals values. This is good news for investors because now is a great time to buy gold and silver while prices remain low. You’ll get to reap the benefits of a sound investment once prices inevitably rise again.


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