The yield on the 10-Year Treasury Note fell 5.6% in afternoon trading as stock prices gained and Treasury yields fell. Gold stocks were on the move today, riding a broad relief rally. The value of all assets increased.
Bond prices increase when yields decrease, whereas other asset values increased, including those of equities, cryptocurrencies, commodities like oil, and precious metals like gold.
The Bank of England's decision to purchase long-term U.K. government bonds in try to stabilise the pound after the currency had fallen dramatically against the dollar in recent weeks appears to be the most plausible cause of the shift, even though there was no evident catalyst.
Some investors view gold as a haven from the printing of fiat currencies, particularly during periods of strong inflation, while others think higher interest rates are bad for gold since they make fixed income investments like bonds more appealing.
Gold prices are down this year despite high inflation and economic turmoil from the Ukraine war, but the precious metal responded favourably to the Bank of England's intervention, which cooled the growing U.S. dollar. The dollar index fell more than 1% in the afternoon, which is good for gold.
Spot gold prices were up 2% as of 4:18 p.m. ET, propelling gold miners to new heights. Equinox Gold (NYSEMKT: EQX), which gained 16% and closed the day up, Eldorado Gold (NYSE: EGO), which increased 13.4%, and New Gold (NYSEMKT: NGD), which increased 13.5%, were among the winners.
Equinox's AISC for gold mining was $1,657 per ounce, according to its second-quarter financial report. Gold prices fell below that barrier this week, hitting $1,622.20 per ounce this morning. Equinox loses money selling gold at that price. Spot gold prices rose to $1,670 in midday trading, allaying worries.
Equinox lost $47.9 million, or $0.26 per share, in the second quarter when gold prices averaged $1,856 per ounce. It's projected to lose more in the third quarter as gold prices decline.
Eldorado's second-quarter AISC was $1,270 per ounce, higher than Equinox's. The company reported production challenges in the first quarter, decreasing its target and rising its AISC from $1,180 to $1,280. Eldorado generated a $13.8 million adjusted second-quarter profit, but investors should watch production and supply chain challenges.
Recent earnings explain why New Gold shares are under $1. Second quarter all-in sustaining costs were $2,373 per ounce, unsustainable production. New Gold lost $16.7m on $115.7m in sales.