Which US presidential candidate does gold prefer?
Gold loves chaos and should be hitting new highs, especially with inflation coming down and with it, two rate cuts likely before year’s end.
Roaring global stock markets on Tuesday elbowed gold aside as the investment de jour, with the precious metal losing $20.30 an ounce from Monday’s close.
Traders took on more risk as the fallout from Brexit assumed a calmer tone, reflected by the certainty of a new British prime minister, Theresa May, replacing David Cameron. In Japan, the re-election of Prime Minister Shinzo Abe on Sunday, also reassured the markets that Abe will continue his economic reform program known as “Abenomics”, including more stimulus.
The result was a full-on bullish appetite for stocks in Europe, Asia, New York and Toronto. A day after the S&P 500 closed at record highs, the Dow Jones Industrial Average did the same thing, edging up 120.74 points to finish the day at 18,347.67 – the best performance since May 2015. The S&P also extended gains by a hair, adding 14.98 points to close at another record 2,152.14. In Toronto, the S&P/TSX composite index was also on fire, led by gains in energy stocks, as crude oil surged by around 4%. The top two Canadian oil sands producers, Suncor (TSX:SU) and Canadian Natural Resources (TSX:CNQ), each spiralled up a respective 2.59% and 3.71%.
July 12 gold movements, chart by Kitco.
Predictably, gold took it on the chin, falling 1.65%, as retail and institutional investors raced toward higher returns found in equities. Another factor was the yield on the U.S. 10-year Treasury note rising slightly from 1.43 to 1.5 percent as bond prices fell. 10-year yields were at an all-time low of 1.32%. Silver was also hit, though not as badly, with the white metal off 1%, to $20.20 at the close. A week ago gold hit a two-year high of $1,376.20, but the price has given up $32.54 as of Tuesday’s close of $1,343.66.
Gold company investors should be poised to pick up some bargains tomorrow though, with most of the major gold miners on sale.
Here is a look at some of the day’s losses, with a hat tip to Motley Fool for listing the Australian gold companies:
Barrick (NYSE:ABX) -6.44%
Goldcorp (NYSE:GG) -2.89%
Kinross (NYSE:KGC) -4.5%
Newmont Mining (NYSE:NEM) -2.68%
Anglogold Ashanti Limited (NYSE:AU) -4.32%
Newcrest Mining (ASX:NCM) -3.2%
Burey Gold Limited (ASX:BYR) -9.5%
Troy Resources (ASX:TRY) -6.7%
Orinoco Gold (ASX:OGX) -6.9%
Market Vectors Gold Miners ETF (NYSEARCA:GDX) -3.92%
