Why Gold Fell 2.5 pct On Friday

Gold benefits from falling rates and a weaker dollar. It got hurt on both fronts on Friday. The big jump in rates pushed the dollar sharply higher. That combination pushed gold $31 dollars lower (a loss of -2.5%). The first chart shows gold falling back below its 200-day average on rising volume. Gold shares also fell. The second chart shows the Market Vectors Gold Miners ETF GDX losing -5.5% at week’s end which kept it below its 200-day moving average. Gold stocks have been market leaders during the first two months of the year. Higher rates might change that.

gold_6-feb-2015

gdx_6-feb-2015

The third chart is the 10-Year Treasury Note yield which shows a jump to the highest close in a month. [Bond prices fell sharply as a result]. Short-term rates jumped even more. That big jump in rates helped banks and brokers have a strong day. Higher rates and a stronger dollar also hurt gold.

10_year_treasury-6-feb-2015

Courtesy of stockcharts.com

Receive these articles per e-mail

Subscribe for the free weekly newsletter and receive 3 papers about physical precious metals investing