Gold prices drop
Below is our gold price and fundamental analysis. For an in-depth fundamental look at crude oil and related companies, sectors, and drivers, please refer to our Gold ETFs page.
COMEX-traded gold futures for June delivery fell marginally by 0.24% and closed at $1,190.30 per ounce on Wednesday, May 6, 2015. Gold prices were down as the US ten-year Treasury yield hit an eight-week high. ETFs like the iShares Gold Trust (IAU) and the SPDR Gold Trust ETF (GLD) track gold’s price movement. They traded almost flat yesterday. Likewise, the VanEck Vectors Gold Miners ETF (GDX) didn’t change at the close of yesterday’s trade.
Gold price fluctuations impact gold mining stocks like B2Gold (BTG), Agnico Eagle (AEM), and Primero Mining (PPP). These stocks account for 8.16% of GDX. Silver prices mirrored gold’s price movement. It dropped by 0.44% and closed at $16.50 per ounce at the end of yesterday’s trade.
The US ten-year Treasury yield increased to an eight-week high and rose for the eighth consecutive session. This put pressure on the gold prices. The better yielding bond curbs the demand for gold and prices drop. The narrowing of the yield gap between US ten-year Treasury yields and their German counterpart declined by 165 basis points. This contributed to the US dollar declining against the euro.
The US Dollar Index also fell by 1% against the basket of currencies. The US dollar also depreciated due to weaker-than-expected jobs data reported by the ADP National Employment Report. US private companies added 169,000 jobs in April 2015—the lowest since January 2014. Reuters surveys estimated an increase of 200,000 jobs. The U.S. Department of Labor will release the non-farm payrolls report on Friday. The depreciating dollar supports gold prices.
Gold prices dropped for the sixth time over the last ten days. During the same period, prices increased by 0.35% more on the average up days than on the down days. Gold and silver had average performances with respect to other commodities on Wednesday’s trade.
Gold prices gained a meager 0.19% YTD (year-to-date)—led by the depreciating dollar and festive seasonal demand from India. Gold’s long-term trend is still bearish.