Gold’s premium over silver hovered near six-week highs Friday, as both metals ran into volatility amid heightened Federal Reserve speculation.
The gold/silver ratio closed at 70.88 Friday, according to goldprice.org. This essentially states that one ounce of gold is worth 70.88 ounces of silver. The ratio reached 71.50 earlier in the week, its highest since mid-July.
The gold/silver ratio has increased 5.5% over the past 30 days, as selling pressure returned to precious metals. Prices of silver have declined much more rapidly than gold. Since August 1, December gold futures have declined 2.5%. By comparison, silver’s losses have amounted to 8.7%.
Silver’s December contract settled at $18.72 a troy ounce Friday, having declined 3.8% for the week. Gold’s losses amounted to 1.5% this week, with the December contract closing at $1,325.90 a troy ounce.
Precious metals had a volatile Friday session after Federal Reserve Chairwoman Janet Yellen said the case for raising interest rates had strengthened. While Yellen’s comments offered few clues about the pace and timing of future rate hikes, the Fed’s No. 2 Stanley Fischer said pointedly that rates could rise as early as next month. Both policymakers acknowledged that the Fed remains data-driven in its decisions.
Despite their recent declines, gold and silver remain firmly in bull market territory. Analysts have long warned about corrections and choppy trading conditions amid an uncertain policy environment. Precious metals had few trading catalysts last week ahead of Yellen’s speech.
The return of bull market conditions for gold and silver has been a boon to the mining sector. The metals and mining component of the S&P 500 materials index has surged 45% this year. By comparison, the materials sector as a whole has gained 11.5% year-to-date. At their highest, metal and mining stocks were up over 60% this year.
As one might expect, mining shares declined sharply this past week, reflecting the latest downtrend in precious metals. The sub-sector was down 6.5% over the past five days.
SOURCE: Economic Calendar
