Gold miners slide 5% as 80% September rate hike odds pressure bullion

Hong Kong Gold Stocks	Change
LAOPU GOLD (06181.HK)	-5.56%
ZIJIN MINING (02899.HK)	-3.34%
ZIJIN GOLD INTL (02259.HK)	-3.77%
LINGBAO GOLD (03330.HK)	-4%+
CHINAGOLDINTL (02099.HK)	-4%+

Gold fell more than 2% to $4,043 an ounce as CME FedWatch data showed 80% odds of a September rate hike, up from 68% a day earlier.

"The market has already priced in no rate hike by the Federal Reserve next week, though the tone may be hawkish," Jim Wyckoff, an analyst at the American Gold Exchange, said.

Middle East tensions pushed Brent crude above $100 a barrel, stoking inflation concerns and driving the repricing of rate expectations. Fed funds futures now indicate a more than 80% chance of a quarter-point increase in September, according to the CME FedWatch tool. The 10-year US Treasury yield briefly topped 4.7%, its highest level since January 2025.

UBS maintained its gold price targets at $4,400 an ounce for September and $4,600 for December, with $5,000 and $5,200 forecast for March and June next year. The bank expects the US to resume rate cuts in March 2027, which could support bullion prices over the longer term.

Gold Miners Lead Declines in Hong Kong

Gold producers fell across the board in Hong Kong trading. LAOPU GOLD sank 5.56% to HKD 370.2, making it the worst-performing blue chip stock with turnover of HKD 160 million. ZIJIN MINING dropped 3.34% to HKD 32.4, while its subsidiary ZIJIN GOLD INTL declined 3.77% to HKD 115. LINGBAO GOLD and CHINAGOLDINTL each fell more than 4%, and CHIFENG GOLD lost 3.5%. SD GOLD and ZHAOJIN MINING declined 2.1% to 2.9%.

Jewelry retailers also weakened. CHOW TAI FOOK fell 1.8%, CHOW SANG SANG lost 1.4%, and LUK FOOK HOLD edged down 0.3%.

Resource Stocks Slide on Broader Risk-Off Sentiment

Resource stocks came under pressure as the broader Hong Kong market declined. The Hang Seng Index stood at 24,949 points, down 261 points or 1%, with turnover of HKD 75.8 billion. MMG fell 5%, while CHALCO and JIANGXI COPPER dropped 4% to 4.5%. CMOC declined 3.9%, and CHINAHONGQIAO fell 2.9%.

The selloff extended across Asia-Pacific markets, which were also weighed down by new US tariffs of 10% to 12.5% imposed on about 60 countries or regions.

Higher interest rates increase the opportunity cost of holding non-yielding assets such as gold. The bond market now prices a quarter-point hike as likely by September or October and all but certain by December, according to Bloomberg's rate outlook. The last time the Fed raised rates, across 2022 and 2023, gold prices fell sharply before bottoming alongside peak hawkishness.

This article is for informational purposes only and does not constitute investment advice.