The stock market once again moved higher on Tuesday, buoyed by hopes about declines in coronavirus cases in some of the hardest-hit states in the U.S. recently. The biggest gains came for the Dow Jones Industrial Average (DJINDICES:^DJI), but the S&P 500 (SNPINDEX:^GSPC) and Nasdaq Composite (NASDAQINDEX:^IXIC) were also up modestly.

Today's stock market

Index

Percentage Change

Point Change

Dow

+0.62%

+164

S&P 500

+0.36%

+12

Nasdaq Composite

+0.35%

+38

Data source: Yahoo! Finance.

Many stock market investors don't pay a lot of attention to gold and other commodities. There's good reason for that, as many precious metals investments don't produce income and offer no growth potential other than that driven by supply-and-demand factors. Nevertheless, even if you never buy gold, understanding what's pushing the precious metals complex higher can help you with your stock market investing as well.

Six bars of gold bullion stacked in a pyramid.

Image source: Getty Images.

Big moves for metals

Precious metals were up across the board on Tuesday, with gold rising above $2,000 per ounce for the first time. In summary:

  • Spot gold prices jumped almost $40 per ounce, closing around $2,017 by the end of the session.
  • Silver prices were up even more on a percentage basis, picking up more than 6% and finishing near $26 per ounce. That's the semiprecious metal's best close in years.
  • Platinum picked up $20 per ounce to close at $934.
  • Palladium, which like platinum has industrial uses in the automotive industry, climbed $38 per ounce to $2,016.

Mining stocks also got a boost from the gains in the commodities markets. The VanEck Vectors Gold Miners ETF (NYSEMKT:GDX) climbed nearly 5% on the day. Some individual gold stocks did even better, with Coeur Mining (NYSE:CDE) rising 9% and Hecla Mining (NYSE:HL) picking up 8% on the day. In the precious-metals streaming space, Wheaton Precious Metals (NYSE:WPM) posted a 6% gain.

Macroeconomic factors are helping gold

Financial markets are interrelated, and what affects one has impacts on others. In gold's case, investors are benefiting from conditions in other areas that make it easier to buy and hold on to precious metals. In particular, rock-bottom interest rates have reduced financing costs for gold investors, and that's helped to prevent major price declines in the metal.

Falling interest rates have also sent the value of the U.S. dollar down compared to key foreign currencies like the euro. That in turn makes gold a more attractive store of value, pushing some international investors out of the greenback toward hard assets. It also helps out shares of multinational corporations, because the revenue and profits they earn overseas translate into more U.S. dollars. That promotes growth, and if it persists, it would represent a significant reversal from the dollar's strength in past years.

These same factors are also increasing appetites for stocks, contributing to the market's rally. With central banks seemingly ready to add monetary stimulus without limit, and the prospects for further fiscal stimulus from the federal government, the trends that have sent both gold and stocks higher show few signs of slowing down anytime soon. That's good news for momentum-driven traders, but for those hoping to pick up bargains from companies whose business prospects have suffered during the pandemic, long-awaited corrections after the market's four-month run higher might not come nearly as soon as some expect or hope.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.