It’s been a good day for gold miners.
Shares for Northern Star Resources Ltd [ASX:NST] are up 7.61% at time of writing. Newcrest Mining Ltd [ASX:NCM] also had an increase up 6.72%, Saracen Mineral Holdings Ltd [ASX:SAR] is up by 5.76% and Gold Road Resources Ltd [ASX:GOR] surged 5.37%.
Spot gold prices in US dollars increased, hitting US$1,738.70 at close yesterday.
Gold prices climbed after the US Federal Reserve left interest rates on hold
During their June Federal Open Market Committee meeting, the Fed left rates the same at a low 0-0.25%. In fact, as Fed’s chairman Jerome Powell said during the press conference, the Fed isn’t looking to raise rates for a while:
‘So we’re not thinking about raising rates. We’re not even thinking about, thinking about raising rates.’
According to the economic projections released by the Fed, interest rates could stay put until 2022.
Powell also vowed to continue supporting the economy through unconventional programs until confidence and employment recover. As Powell said:
‘We will continue to use these powers forcefully, proactively and aggressively until we’re confident that we are solidly on the road to recovery. When the time comes, after the crisis has passed, we will put these emergency tools back in the toolbox.’
And while the last May unemployment came out better than expected, the Fed doesn’t expect a quick recovery. Looking ahead, the Fed believes the US economy will end the year with unemployment at a high 9.3% and a 6.5% drop in GDP.
Whenever the economy’s outlook turns bleak, investors jump into gold.
Aussie gold miners are benefitting from double whammy
Aussie gold miners are gaining from higher prices after the Fed’s meeting but also because at the same time the Australian dollar lost ground against the US dollar.
Gold is priced in US dollars, so when the price of the Aussie dollar moves down against the US dollar, Aussie gold investors will get some extra money from the falling exchange rate.
Gold expert Jim Rickards expecting gold prices to hit US$10,000 in the next years. In a recent exclusive video interview with Rum Rebellion’s Editor Greg Canavan, Jim explains why.
To watch this free interview, click here.