Oil, stocks, and gold
Gold futures for April delivery rose by approximately 1.4% on Tuesday, January 26, 2016. The increase in the precious metal was strong due to its safe-haven appeal as the Asian equities have gone weak, extending the global slump. Since the start of the new year, gold has been responding to the price changes in oil and equities, thus answering the safe-haven calls. The fall in crude oil leads to a fall in equities, which in turn leads to a rise in gold.
On Tuesday, gold touched a two-month high of $1,123.60 per ounce and closed at $1,120.60. The surge in gold also raised its volatility, which was followed by the fall of stocks. The Federal Reserve’s dovish statement yesterday may further buoy gold and gold-based investments like the iShares Gold Trust (IAU) and the SPDR Gold Shares ETF (GLD), which have risen by 5.9% and 5.8%, respectively, since the beginning of the year.
All the precious metals rose on Tuesday, with silver, platinum, and palladium rising by 2.2%, 1.8%, and 0.33%, respectively. The US Dollar Index (DXY), which prices the US dollar against six major world currencies (the Swiss franc, the Canadian dollar, the euro, the sterling pound, the Swedish krona, and the Japanese yen), fell by 0.36% on the same day. This gave a lift to the bullions, as they are denominated in the greenback.
The mining stocks also rose on the day as the precious metals surged. The top-performing mining equity listed in the VanEck Vectors Gold Miners ETF (GDX) was Cia De Minas Buenaventura (BVN). However, AuRico Gold (AUQ) and Centerra Gold (CG) fell by 2.8% and 2.2%, respectively. These three stocks together make up 5.7% of GDX, which rose by 4.4% on Tuesday.