uploads///Gold price versus US Ten year Treasury yield

The Federal Reserve Minutes Pushed Gold Higher


Dec. 4 2020, Updated 10:52 a.m. ET

Fed minutes

As the Federal Reserve released minutes from its December meeting, gold prices jumped higher. The minutes signalled that the Fed would not be too fast to lift rates, and the progress would be gradual as previously suggested. The rate rise could adversely affect non-interest-bearing precious metals like gold and silver, as they do not provide cash flows like Treasuries. The rising interest rates on Treasuries pose a threat to precious metal investors. Below is a price performance chart of gold versus the US ten-year Treasury yield.

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Gold futures traded on COMEX for February expiry on Wednesday, January 6, gained 1.3% to close $13.5 higher than the previous day’s close. After touching the high of $1,094.9, it closed at $1,091.9 an ounce. Silver rose marginally by 0.04%. Platinum and palladium continued retreating due to weak global demand. Platinum slipped 1.7% to close at $875. It was the lowest close platinum had given in about two weeks. Palladium remained the worst-performing precious metal, falling a whopping 5.7% to close at $505.1 an ounce.

Mining stocks

Mining companies like Alacer Gold (ASR), AngloGold Ashanti (AU), Yamana Gold (AUY), and Franco-Nevada (FNV) gained 5.1%, 4.9%, 3.6%, and 4.2%, respectively, on Wednesday. These four companies together make up 10.3% of the price changes in the VanEck Vectors Gold Miners ETF (GDX). The GDX ETF itself witnessed a gain of 1.6% on the day.


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