Gold mining stocks were weaker today as the price of the precious metal slumped on inflation fears.
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The VanEck Gold Miners ETF (GDX) was down 7% today with major holdings Agnico Eagle Mines (AEM) off 7.04%, Newmont Mining (NEM) down 8.86%, and Wheaton Precious Metals (WPM) down 7%.
The spot gold price was down nearly 2% at $4,610 – see below:
The main drag on the gold price continues to be the war in Iran, which has led to higher oil and gas prices. That has raised the fear of higher inflation and less likelihood of interest rate cuts. Indeed, they may have to be raised to tackle rising prices.
Gold is traditionally seen as a hedge against inflation, but low rates also make it more attractive because it is a zero-yield asset.
“While geopolitical tensions remain elevated, the resulting increase in energy prices has raised inflation concerns, reducing the likelihood of near-term rate cuts,” DHF Capital’s Bas Kooijman said. “This has temporarily weighed on gold, as higher yields make non-interest-bearing assets less attractive.”
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