ASX-Listed Gold Miners Gain on Rising Bullion Price 

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Summary

  • Gold stocks gained 1% during the early hours of trade as the price of the yellow metal was moving up amid declining US Treasury yields.
  • Several gold stocks surged today, benefitting from the rise in gold prices.
  • Newcrest Mining soared 1.8% and reached A$24.410 today, its highest since 25 February 2021.

The tech and gold stocks led from the front in today’s trading session, as the Australian stock exchange opened in green. The Australian gold index AXGD rose for the second consecutive day, soaring 1.3% on 16 March 2021.

In the US, the markets closed higher on 15 March 2021 in the wake of the 10-year US Treasury Bond Yield falling from its 1-year highs ahead of the Federal Reserve meeting.  

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The relation between bond yield and gold explained

People invest in bonds to get a fixed return in the form of interest. The coupon rate (interest) is fixed by the issuing body at the time of issuance. What adds to their charm is that bonds are comparatively less volatile and guarantee a fixed return to the holders. Gold, on the other hand, is believed to be a go-to investment during the times of uncertainty and inflation.

Also Read: Gold slides as bond yield & US dollar strengthens, is this an opportunity? 

There is a negative correlation between gold prices and bond yields. This means, if the bond yield moves downward, then the gold price will rise and vice-versa. Essentially, holding gold has its opportunity cost, which does not bear any yield. So, when the bond yields become attractive, money tends to flow from gold to bonds.

On Monday, 15 March 2021, the 10-year Treasury note yield dropped 2.5 basis points to 1.609%. The investors are keeping a keen eye on the Federal Reserve’s meeting this week and hoping that the policymakers could offer some sharp-rising long-term bond yields this year.

Informative Read: How is the Gold Market Unfolding for ASX-listed Gold Stocks in 2021?

Several ASX-listed gold miners gained in the today’s session amid the news of retreating bond yields.

Large-cap Newcrest Mining Limited (ASX:NCM) rose 1.8% during the early hours of trading. After the market close, Newcrest settled at A$24.410 per share, gaining 0.205% over its last closing price.

Newcrest is among the largest gold producers listed on the ASX. The Company has announced a dividend of A$0.193 per share for the half-year period ended 31 December 2020. The dividend is due for payment on 25 March 2021.

The current annual dividend yield of the stock is 1.79%.

Wiluna Mining Corporation Limited (ASX:WMX), a junior gold production company, registered a high of A$1.130 within the first hour of the trading. The Company released an excellent update on its underground operations at the Wiluna Mining Centre. The underground ore reserve increased by 142% to 4.33 Mt @ 4.74g/t Au for 661 koz of gold.

Due to high market volatility, WMX could not maintain the initial gains and slid to A$1.070 at the end of the trading session.

Western Australia-based gold miner De Grey Mining Limited (ASX:DEG) is engaged in mining and production activities at its fully owned Mallina Gold Project in the Pilbara region. Amid rising bullion prices, the shares of the Company went up to A$1.025 before coming down and closing at A$0.990.

Copyright © 2021 Kalkine Media Pty Ltd.

Interesting Read: Why is De Grey Mining (ASX:DEG) Trading High in Today’s Session?

De Grey Mining came into limelight as its share appreciated 2000% during the year 2020. The company’s shares have returned nearly 450% during the last six months to its shareholders.

 

 


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