Ground Breakers: Powell releases the hawks to tear strips off ASX gold miners

“Jay” goes (more) hawkish as rate rise chatter hammers gold
ASX gold miners tumble, now down year to date
Sayona and Piedmont celebrate first concentrate from Canadian lithium mine

And we thought rate rises were done.

Nope, Jerome “Jay” Powell has returned to his heavily fortified castle, poured a glass of cognac and mischievously called on the guards to unleash the hawks again.

The Fed Reserve chair’s comments on Tuesday that interest rate hikes were “likely to be higher than previously anticipated” in the United States have struck the fear of god into capital markets.

More significantly for Australia and its gold heavy equity markets, they precipitated a 1.8% fall in gold prices to US$1813.39/oz.

The All Ords gold subindex is down a crushing 3.32% and after a bright start to the year for gold prices, at one point trading well above US$1900/oz, the key Aussie indicator of its gold industry’s health is now in negative territory year to date.

Our gold miner watch-list is bloody and bruised today, specks of red flying like a John Carpenter slasher.

Northern Star (ASX:NST) is down 3.01%, Evolution (ASX:EVN) 4.5%, Ramelius (ASX:RMS) has sieved 10.7%. Newcrest (ASX:NCM) fell 3.08% to $23.29, now less than a dollar above its closing price before a rejected takeover bid from Newmont sparked a run in its share price.

Investors now think US interest rates could rise above 6% this year, with the US Fed having projected a terminal rate as late as last September of 4.6%.

CME Group says markets expect an eventual fund rate of 5.5-5.75%. The current target level is between 4.5-4.75%.

Analysts have been bullish about gold this year, a traditional hedge against geopolitical instability, monetary inflation and market uncertainty.

But rate rises are the enemy.

“Gold is getting crushed as the soft landing trade blew up today and sent the dollar higher. Gold is in the danger zone once again and could see major bearish momentum on the break of the $1800 level,” OANDA senior market analyst Ed Moya said overnight.

“The Fed is locked into a much more aggressive tightening stance and that could keep the short-end of the curve heading higher.

“Gold might struggle here as bond bears completely ride this move higher in yields. Non-interest bearing gold should have some support at the $1800 level but that could be tested if the next jobs and inflation report support the case for more aggressive rate hikes.”

Gold miners share prices today:

Sayona lifts off at NAL lithium

The reinvention of Canada’s lithium industry has hit a major milestone, with Sayona Mining (ASX:SYA) announcing the start of concentrate production from its North American Lithium project in Quebec.

A restart after the company who previously owned the mine went bust during the downturn, it is the first of what could be a number of new spodumene producing operations started in Canada by Aussie expats.

The project, partly owned by fellow ASX lithium stock and offtaker Piedmont (ASX:PLL), has produced 70t of spodumene concentrate so far.

Commissioning is ongoing with a first shipment expected in July and four shipments to take place across the first half of FY24 as the mine and concentrator turn out between 85,000-115,000t of con.

It comes just a day after Sayona announced it had secured an additional $55m in equity funding to bankroll drilling programs across its Quebecois projects. A 50,000m program has been planned at NAL and the adjacent Vallee Lithium project owned by Jourdan Resources, where NAL’s owners announced an earn-in deal in November.

Around 24,000m of the drilling will take place at Vallee starting in May, part of what Sayona says is “likely one of Quebec’s largest drilling programs this year”.

“Sayona is excited to be partnering with Jourdan Resources as we undertake a large scale and extensive drill program at NAL and the earn‐in claims at the Vallée Project,” Sayona MD Brett Lynch said.

“The combined drilling program will be undertaken in consultation with our local community stakeholders, to pursue a bigger mineral resource base and better grades in the Abitibi Hub capable of delivering increased ore tonnages to the NAL concentrator and a longer mine life.”