Gold Market #4 –
A little more from Bloomberg on how gold prices are affected by interest rates.
Bond yields climbed around the world after the Reserve Bank of New Zealand unexpectedly raised rates today. The European Central Bank yesterday raised a benchmark rate to the highest in six years. Holding gold becomes less attractive when rates rise because the metal has no fixed returns.
``As interest rates go higher and higher, it makes the purchase of any commodities, which never pay interest or have yield, a poor judgment,'' said Leonard Kaplan, president of Prospector Asset Management, a money-management company in Evanston, Illinois.