Gold miners drag ASX 200 lower as bullion prices fall
Make us a preferred source
Make us a preferred source on Google
The news: Gold miners led the biggest losses on the ASX 200 in morning trade after bullion fell to around USD5,000 ($7,133) an ounce as the Middle East conflict entered its third week.
Spot gold had fallen by 0.35% to USD5,003 at 12:20pm AEDT.
The context: The precious metal fluctuated as investors weighed a softer dollar against ongoing threats to global oil supplies. Bullion traded on either side of USD5,000 an ounce before pairing losses, after dropping for a second consecutive weekly session on the back of rising energy prices and inflationary concerns linked to the US-Israeli conflict with Iran.
This was in addition to the attack on Iran’s main oil export hub over the weekend and continued strikes on infrastructure across Gulf countries by Tehran, while traffic through the Strait of Hormuz remains shut.
Traders now see virtually no chance of a rate cut at this week’s US Federal Reserve meeting, while the Reserve Bank of Australia is expected to hike interest rates on Tuesday.
Gold producers including Bellevue Gold (-6.58%), Northern Star (-5.49%), Evolution Mining (-2.55%) and Newmont Corporation (-3.54%) were among the stocks that were hit.
What they said: “Gold’s short-term moves are mechanical as the metal responds to the dollar and rate-cut prospects. However, the war may support bullion in the long run, as the conflict erodes trust in the US among adversaries and increasingly allies,” Capital.com market analyst Kyle Rodda said.
“Concerns over stagflation may also prompt investors to turn to gold as a better store of value over the longer term. But any positive effects may be limited if central banks hike rates aggressively to tame inflation,” he added.
The source: Bloomberg
