What Is Keeping Gold Up?

SPDR Gold Trust (GLD) started off 2015 with a 3% gain, which basically erased the losses incurred in the last three week of 2014. The recent recovery in the price of gold was partly related to the depreciation of the U.S. dollar and the ongoing drop in U.S. long term treasuries. Finally, the minutes of the last FOMC meeting and non-farm payroll report didn’t seem to have much of an impact on the price of GLD, but they still provide some guidance about where GLD could be heading in the coming months.

The recent non-farm payroll report was positive and showed another strong gain of 252,000 jobs during last month – very close to market expectations. Since the report was very close to market estimates, it didn’t seem to move GLD.

Conversely, the ongoing fall in U.S. long term treasuries yields, as indicated in the chart below, may have related to the progress of GLD.

During January (up to date) the yield of 10 year treasury bonds dropped by 0.19 percentage points. As I have pointed out in the past, a fall in long term treasuries tends to bring back up the price of GLD. Over the past few months, the linear correlation between the two data sets was -0.328.

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For more see: 3 Questions About Gold