Gold prices slid 2.9% on Thursday to a 10-month low while silver prices crashed 7% as markets continued to react to the Federal Reserve's more hawkish policy outlook for 2017 amid President-elect Donald Trump's plan to step on the fiscal accelerator.
While hiking its key interest rate a quarter-point on Wednesday, as expected, Fed policymakers signaled a likelihood of three more rate hikes in coming year vs. the two 2017 hikes telegraphed in September.
Fed intentions helped lift the U.S. dollar index to the highest level since January 2003, a negative for gold, which is priced in dollars and whose safe-haven demand as a store of value is being tarnished by a stronger dollar and improving growth. The Spdr Gold Trust ETF (GLD) fell 1%, setting a 10-month low.
Shares of gold miners including Barrick Gold (ABX), Royal Gold (RGLD) and Newmont Mining (NEM) have been among the biggest laggards in the Trump rally. The IBD Mining-Gold/Silver/Gems group is rated 194 out of 197 industry groups based on stock price performance.
On the stock market today, Barrick lost 5%, hitting a multimonth low intraday after sliding 6.4% on Wednesday. Royal Gold gave up 6%, on the heels of Wednesday's 4.0% decline. Newmont shares sank 2.4% on Thursday after skidding 6.5% a day earlier.
IBD'S TAKE: Shares of Freeport McMoRan, one of the world's largest copper mining companies and among the best ways to play the copper rally, cleared a buy point at 13.69 on Nov. 10 and quickly became extended, surging 21% in two weeks. The stock has pulled back, but is worth keeping on your watch list. Visit IBD Leaderboard to keep track of leading stocks like Freeport and others nearing a buy point.
Silver Wheaton (SLW), which owns rights to gold and silver production at various mines, tumbled 8.8% after Wednesday's 3% skid.
"Investors might conclude that even with higher rates looming for 2017, U.S. equities will remain the asset class of choice for most," wrote INTL FCStone analyst Edward Meir.
Investors looking for a safe store of value in this climate may have reason to turn to other metals — those with more industrial applications. IBD's Mining-Metal Ores group has been among the biggest winners of the Trump rally, helped in part by his agenda for an infrastructure-spending binge.
Since Nov. 8, gold prices have fallen close to 12%, while copper is up about 9%, though copper prices had been firming before the election on a more favorable supple-demand balance.
Freeport McMoRan (FCX), a leading stock in the group, is also a gold miner, but it derived 67% of revenue in 2015 from sale of copper and 10% from gold, with oil and molybdenum accounting for most of the balance. Shares of Freeport rose as high as 14.97 but reversed lower to trade down 4 cents at 14.61.
Mining giants Rio Tinto (RIO) and BHP Billiton (BHP) fell 2% and 1.4%, respectively.
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