Understanding the Market | Gold stocks generally under pressure, rising oil prices intensify inflationary concerns, and the Federal Reserve's hawkish signals release a strong message
Affected by the situation in the Middle East and rising oil prices intensifying inflation concerns, the Federal Reserve's hawkish signals have increased, putting pressure on gold stocks. CHINAGOLDINTL, Zijin Mining, and others fell more than 3%. Although the spot gold price remains high and fluctuates, the market's expectation of interest rate hikes is diminishing, and precious metals may continue to consolidate at high levels in the short term
According to Zhitong Finance APP, gold stocks are generally under pressure. As of the time of writing, China Gold International (02099) is down 3.21%, trading at HKD 205.2; Zijin Mining (02899) is down 3.14%, trading at HKD 36.38; Lingbao Gold (03330) is down 2.8%, trading at HKD 23.6; and Chifeng Gold (06693) is down 2.14%, trading at HKD 38.44.
On the news front, on Monday, supported by the uncertainty surrounding the reopening of the Strait of Hormuz and the ongoing tensions in the Middle East, both U.S. and Brent crude oil prices continued to rise in the U.S. market. This has intensified market concerns about the upward risk of U.S. inflation, leading to an increase in expectations for interest rate hikes by the Federal Reserve this year. Meanwhile, Cleveland Fed President Loretta Mester stated that the Fed may need to raise rates multiple times to bring inflation down to the central bank's target level of 2%.
Gold prices have risen for three consecutive trading days, with spot gold currently above USD 4,400. Huatai Futures believes that at this stage, precious metals are responding relatively calmly to changes in the oil price center, with multiple instances of gold prices rising alongside oil prices. If there are no significant signs of escalation in geopolitical tensions or substantial breakdowns in negotiations, precious metals may continue to maintain high-level fluctuations and trade as interest rate hike expectations fade; therefore, it is expected that gold prices may primarily exhibit a strong oscillating pattern in the near term
