Coeur Mining (NYSE: CDE) stock declined 6.6% through 10:25 a.m. ET Monday on sliding gold prices as war continues to rage in the Middle East. Investors often buy gold as a safe haven in times of conflict — and they did this time, too. However, as the conflict drags on, gold prices have turned south.
Gold miner Coeur stock is following them lower.
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Gold closed February around $5,278 per ounce, according to data from TradingEconomics.com. Prices spiked when U.S. and Israeli forces began striking Iran last week, rising as high as $5,416 Monday before beginning to fade.
At last report, gold was trading at $5,079 per ounce, down 1.5% from Friday’s close.
The silver story is similar, and Coeur mines both gold and silver, so this one is also worth a look. Silver closed at $93.73 per ounce at the end of February before moving higher, topping $96.10 Monday. Today, silver is down 0.5% to $83.90 per ounce.
Why are precious metals prices falling? For one thing, the U.S. dollar — also a safe haven — is strengthening.
The U.S. dollar index, which compares the dollar’s value to a basket of international currencies, is up about 1.7% since the war began. A “stronger dollar” means you need fewer dollars to buy an ounce of gold. Thus, when the dollar rises, the price of gold (in dollar terms) falls.
Interest rates can also affect gold prices, and rate worries are rising. When interest rates rise, investors face the choice between owning gold, which doesn’t pay interest, and owning bonds, which do. Investors may sell gold to buy bonds, and when this happens — again — the price of gold drops.
This is why Coeur stock dropped today.
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