El Salvador president proposes bill to overturn metals mining ban
In 2017, El Salvador became the first country in the world to ban forms of metals mining.
Not this again!
Gold prices dropped below the psychologically key $1,100 level on Friday after the US Labor Department revealed the American economy added 271,000 jobs in October, way more than the 185,000 estimated by analysts.
Unemployment rate dropped to 5%, from September’s 5.1%, a figure that is very close to what would normally be considered the threshold for full employment by the Federal Reserve and many private economists.
Gold contract for December delivery was last down $16.40, or 1.5%, at $1,087.80 an ounce on the Comex division of the New York Mercantile Exchange. Prices traded as low as $1,186.70, the lowest level since Aug. 7. December Comex silver was also dropping, and hit $0.163 at $14.815 an ounce in early trading.
Chart courtesy of Kitco.com
The reasons of this sell-off can be found in the comments of Fed Chair Janet Yellen, who early this week said a rate hike in December was a “live possibility” if the economy continued to perform well.
Higher interest rates boost the value of the dollar and makes gold less attractive as an investment because the metal doesn’t pay interest and costs money to hold.
Gold is also looking vulnerable on the technical side. Large futures speculators or “managed money” investors, such as hedge funds, have built up huge long positions – contracts that place bets gold will be more expensive in future – since September while cutting shorts at the same time.
A first rate increase in nine years would show that the Fed is ending its emergency measures that aimed to support the economy after the recession.
Comments
Ouchy
The US economy is not firing on all cylinders despite all the political hype around spotty satistics and the dollar is inflated temporarily.