Nervous about uncertainty throughout the world markets, investors are throwing their cash at gold today, with the price of the precious metal GLDIAU up over 4.5% and the major mining ETFs GDX and GDXJ up 7.7% and 9.7%, respectively.
Today's action has pushed the price of gold to its highest point in a year. Instability in the global markets, as well as a lower dollar and U.S. treasury yields are the major culprit. These global concerns are being brought on by European bank shares hitting multi-year lows.
Furthermore, a lower dollar means that holders of other currencies can buy gold at a cheaper costs. The dollar slumped Thursday as pressure from a surging Japanese yen, which rose to 15 month highs, continued to mount.
Another important factor is that the benchmark 10-year U.S. treasury yield also fell, hitting lows that haven't been seen in over three years. Also, Fed chair Janet Yellen's comments in front of Congress, which implied that the Fed may not continue with its scheduled interest rate increases, are pushing gold prices up.
Investors typically associate lower interest rates and lower bond yields with rising gold prices because the metal becomes more attractive as other investments yield less.