Gold has experienced a significant downturn, plunging more than 10 per cent from its record peak of over $US5500 an ounce. This substantial slide, occurring over four days, reflects market reactions to US President Donald Trump’s nomination for the US Federal Reserve governor. The correction in bullion prices is anticipated to exert downward pressure on gold miners as the ASX 200 commences trading this morning.
Newmont, a leading gold and copper producer, experienced a notable decline. After Friday’s session on Wall Street, Newmont dived 11.4 per cent, and its CDI’s also dropped 8.1 per cent on the ASX 200 on Friday. Newmont is one of the world’s largest gold producers. It focuses on discovering and developing gold and copper resources.
The price of gold is now trading just below $US4900 an ounce. This follows a surge to a record high of around $US5500 mid last week, driven by investors seeking a safe haven amid a flight from the US dollar. Concerns surrounding the Federal Reserve’s independence, ongoing trade wars, and geopolitical tensions also contributed to the previous price surge.
The current selloff was initiated by a rebounding US dollar after Trump nominated Kevin Warsh for Fed chair. Traders view Warsh as the most stringent inflation hawk among the candidates, heightening expectations of monetary policy that would bolster the dollar. A stronger dollar typically weakens bullion prices, as gold is often priced in US currency.
