Summary
Asian gold stocks posted gains as bullion recovered from a near six-week trough. Declining oil prices and a weaker dollar helped ease inflation fears and underpinned demand for the non-yielding metal, even after the Federal Reserve raised rates and indicated another hike may be possible later this year.
Market moves and bullion prices
Gold extended a rebound on Thursday, rising more than 2% from the previous session's low. Spot gold reached $4,360.36 an ounce, while U.S. gold futures settled 0.3% higher at $4,399.70. Into Friday trade, spot prices remained higher at about $4,361 an ounce, roughly a 0.5% increase from the immediate prior levels.
The uptick came after a sharp decline earlier in the week following the U.S. Federal Reserve's decision to raise interest rates by 25 basis points to a target range of 3.75%-4%. The Fed also signalled that another rate increase could occur later this year. Lower Treasury yields and a retreat in the dollar subsequently supported demand for gold.
Asian miners follow bullion
Asian-listed gold producers broadly tracked the metal's recovery on Friday. Notable moves included:
- Sumitomo Metal Mining - up 2.4%
- Westgold Resources - up 2.4%
- Genesis Minerals - up 4.3%
- Evolution Mining - up 2.9%
- Northern Star Resources - up 2.5%
- Regis Resources - up 1.9%
- Ramelius Resources - up 2.3%
- Perseus Mining - up 1.9%
Among Chinese miners, gains and losses were mixed. Zijin Gold International rose 1%, Chifeng Jilong Gold Mining gained 1.7%, and Zijin Mining Group was essentially flat at a 0.1% change. Conversely, Lingbao Gold fell 1.2%, Shandong Gold declined 2.6%, and Zhaojin Mining Industry dropped 3.3%.
Drivers behind the rebound
One of the immediate catalysts for the rebound was a continuation of falls in oil prices into a second day. Brent crude was about 1% lower on Friday, trading around $103.77 a barrel. The decline in energy costs helped ease concerns that elevated oil prices would keep inflation higher for longer and force central banks to maintain a tighter policy stance.
The combination of lower Treasury yields and a softer dollar further supported the appeal of gold, which does not pay interest and tends to benefit when real yields fall.
Outlook and sensitivity to policy
Market participants remain attentive to the path of U.S. monetary policy. The Fed's September increase was its first in three years, and 16 of its 18 policymakers see at least one further rise by the end of 2026. That outlook leaves bullion prices and gold equities sensitive to shifts in interest-rate expectations, Treasury yields, and currency moves.
Note: This report is limited to the information provided on bullion prices, commodity moves, the Fed's rate action, and the listed Asian gold miners' intraday percentage changes. No additional events, dates, or figures beyond those detailed here are included.
Key points
- Gold rebounded more than 2% on Thursday, with spot gold at $4,360.36 an ounce and U.S. futures at $4,399.70.
- Asian gold miners broadly rose, led by gains in companies such as Genesis Minerals and Evolution Mining.
- Falling oil prices and a softer dollar helped reduce inflation concerns and supported demand for gold despite the Fed's rate hike.
Risks and uncertainties
- Further U.S. interest-rate hikes remain possible - the Fed signalled another increase could come later this year, which could pressure gold and related equities if yields rise.
- Volatility in oil markets could reverse the recent decline in energy costs; higher oil would feed inflation concerns and potentially alter central bank expectations.
- Currency and Treasury yield moves are key variables - a stronger dollar or higher yields could dampen gold demand and weigh on miner stocks.