The ZEMA graph above shows gold and silver daily prices on CME between October 01,2015 – December 02, 2015. The yellow line represents COMEX 100 Gold (USC/toz), the blue line represents COMEX 5000 Silver (USC), the red line represents the gold 7-day moving average, and the green line represents the silver 7-day moving average.
The price of precious metals including gold and silver continue to be hammered as a result of oversupply in the market coupled with strong US dollar growth this fall.
On the CME, Gold prices began the month of November at 1,135 USD/Toz down by $67 to 1,068 USD/Toz on November 18, which was the lowest level since 2010, before recovering slightly and closing at 1,074 USD/Toz on November 23. The increase in the Federal US rates tend to weigh on gold, as they lift the opportunity cost of holding non-yielding assets, while boosting the dollar. Against this background we will expect a decline in pricing of precious metals. However, it has resulted in increased selling on the Shanghai Gold Exchange, and from expectations that the Fed would increase interest rates.
On the other hand, Sliver suffered the lowest pricing levels in 65 years and fell throughout the first 3 weeks of November. Silver prices began with 15.41 USD/Toz on November 02, down with 7.7% to trade at 14.22 USD/Toz on November 16 and closing with further loss of 0.42% at 14.16 on November 24. The US dollar also continues to put pressure on the commodities complex.
The US dollar is also expected to climb further on the likelihood of a US rate hike in December this year. According to CME Group, there is a change of 74% chance of increase in the UF rate by the end of this year and it is assumed that the effective federal funds rate will average 0.35% after the first increases in comparison to the current 0 to 0.25% average.
Data Sources: CME