Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold prices declined to their lowest in almost two weeks on Thursday as US bond yields rebounded, curbing the appeal of the non-interest bearing metal.
Spot gold fell 0.8% to $1,941.77 an ounce by 11:50 a.m. ET, having dropped by as much as 1.1% earlier in the day. US gold futures were 0.7% lower at $1,941.30 per ounce.
[Click here for an interactive chart of gold prices]
Meanwhile, 10-year Treasury yields rose amid a debate around whether inflation is peaking, edging towards the more than three-year peak scaled in the previous session.
Real rates turned positive for the first time in two years this week, a sign investors believe the US Federal Reserve can raise interest rates to cool inflation without severely hurting the economy.
San Francisco Fed President Mary Daly said on Wednesday she believes the case for a half-percentage-point rate hike next month is “complete” and “solid,” with the Fed’s rate hike path this year broadly seen as appropriate in the face of high inflation.
“Gold is seeing a correction following the climb to near the $2,000 level since the market is expecting the Fed to be more aggressive in hiking rates, while yields are also moving up,” Bart Melek, head of commodity strategies at TD Securities, told Reuters.
Still, a Fed anecdotal survey showed inflationary pressures have remained strong, clouding the outlook for future growth.
Gold prices are proving resilient — gaining more than 6% this year — as political and economic risks push investors toward the haven asset. That is supporting purchases through gold-backed exchange-traded funds, which have seen holdings rise to the highest in more than a year, according to initial data compiled by Bloomberg.
“While higher interest rates may weigh, worries about inflation, growth, and increased market volatility, together with the war in Ukraine, remain the key reasons why asset managers continue to accumulate exposure,” Ole Hansen, head of commodity strategy at Saxo Bank, said in a Bloomberg note.
Investors are now awaiting policy updates from European Central Bank President Christine Lagarde and Fed Chair Jerome Powell at an International Monetary Fund panel later on Thursday.
(With files from Bloomberg and Reuters)
