Gold miners drag ASX lower after gold’s biggest weekly drop since 1983
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The news: Gold miners dragged the ASX benchmark lower in morning trade as gold prices fell sharply, coming close to wiping out its yearly gains as the Middle East conflict enters its fourth week.
Catalyst Metals (-12.46%), Ora Banda Mining (-9.32%), Greatland Resources (-9%), Pantoro Gold (-8.63%) and Bellevue Gold (-7.24%) were among the heaviest hit. Gold fell as low as 3.8% to around USD4,320 ($6,172) an ounce at 12:50pm AEDT.
The context: Since the war began on 28 February, gold’s decline has been partly driven by forced selling as investors move to cover losses elsewhere in their portfolios.
Surging oil prices have also lifted inflationary risks and reduced expectations for near-term interest rate cuts by central banks globally, weighing on non-yielding gold. The bullion has fallen for eight consecutive sessions and has now recorded its steepest weekly decline since 1983.
This follows Donald Trump’s ultimatum for Tehran to reopen the Strait of Hormuz or face potential strikes on its power plants. Iran is warning it will fully close the waterway if its power facilities are targeted.
What they said: “Gold is primed for a bounce in the short term due to technical reasons. Much will depend on whether Trump follows through with his threats to hit Iranian power plants,” Capital.com analyst Kyle Rodda said.
The source: Bloomberg
