Ground Breakers: Brace yourselves gold miners, the rate rises you’ve all been waiting for are coming
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The US Federal Reserve lifted interest rates by 25bps, its first since 2018, and flagged six further rate rises in a move that initially forced gold below US$1900/oz.
That would see US rates rise to 1.75-2% by the end of the year in a move designed to heed off levels of inflation not seen in decades.
The precious metal had pushed out of its recent US$1750-1850/oz comfort zone and climbed above US$2000/oz briefly last week as uncertainty from the war in Ukraine dominated market chatter.
Will these rate hikes have an impact on gold miners? Not immediately.
The price recovered late in US trade, with little impact to gold stocks on the ASX this morning.
Gold was buying around US$1932/oz at 12.30pm AEDT.
Many investors remain bullish on gold amid the geopolitical instability caused by Russia’s invasion of its neighbour.
“I would say, you want to hold 10% to 15% in gold until we get into an environment where interest rates will become more threatened gold, which is not the case yet,” Ned David Research chief global investment strategist told Kitco News.
Iron ore prices surged back above US$145/t after a big two day fall to ~US$135/t on the back of China’s latest Covid wave.
It came after Xinhua reported Chinese authorities would move to stimulate the economy to stop a precipitous fall in local share markets.
Singapore Futures are now fetching more than US$150/t, with Dalian futures 3.68% higher today.
Fortescue (ASX:FMG), BHP (ASX:BHP) and Rio Tinto (ASX:RIO) were all higher, with FMG leading the large cap gains at 3.74%.
Lithium stocks dominated the gains among the mid-tier, with Lake Resources (ASX:LKE) up big for a second straight day, Core Lithium (ASX:CXO) climbing more than 10% and Vulcan Energy (ASX:VUL) gaining 7%.