Precious metals and metal mining exchange-traded funds (ETF) all rallied following diminishing U.S. consumer sentiment in August, lessening fears that the Federal Reserve will start tapering its pandemic-era bond purchasing program sooner than anticipated.
U.S. Global GO GOLD and Precious Metal Miners ETF
On Friday, the U.S. consumer sentiment index tracked by the University of Michigan's Surveys of Consumers tumbled to 70.2 in its preliminary reading for August, down more than 13% from July's print of 81.2 and below the pandemic-era low of 71.8 reported in April 2020.
"Over the past half century, the Sentiment Index has only recorded larger losses in six other surveys, all connected to sudden negative changes in the economy," Richard Curtin, chief economist for the Surveys of Consumers, said in a press statement. "Consumers have correctly reasoned that the economy's performance will be diminished over the next several months, but the extraordinary surge in negative economic assessments also reflects an emotional response, mainly from dashed hopes that the pandemic would end soon."
That downturn benefitted precious metals, sparking a rebound after gold and silver prices dropped earlier in the week in response to concerns that the central bank would begin to roll back its pandemic fiscal support following July's better-than-expected jobs report. The U.S. Dollar and benchmark 10-Year Treasury Yields also fell after the survey, which also boosted the appeal for precious metals, especially gold.
Precious metals, and their ETFs, are used often by investors as a hedge against inflation or even a safe haven during times of economic downturns as they are valued for their rarity and are used in a broad range of industrial and technology applications.
