Gold stocks surge as hotter than expected inflation sparks safe haven bid

Gold

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Precious metals mining shares are rallying Wednesday as investors seek an inflation hedge, after June U.S. consumer price data showed another 40-year high in annualized inflation, reinforcing expectations of steep interest rate hikes by the Federal Reserve.

The VanEck Gold Miners ETF (NYSEARCA:GDX) surged as much as 4.3% for its biggest intraday gain in more than a month, led by Fortuna Silver Mines (FSM) +5.8%, Gold Fields (GFI) +5.1% and Endeavour Silver (EXK) +4.8%.

Miners trade broadly higher, including (NEM) +1.8%, (GOLD) +1.4%, (NGD) +4%, (KGC) +3.6%, (AU) +4.6%, (AUY) +3.3%, (AGI) +3.5%, (IAG) +3.5%, (HMY) +5.2%, (AG) +4.7%, (HL) +5.1%, (SA) +12.5%.

Gold prices on Wednesday shook off early losses to turn higher, helped by a pullback in the U.S. dollar; August Comex gold (XAUUSD:CUR) +0.7% to $1,737.70/oz, while September silver (XAGUSD:CUR) +1.2% to $19.18/oz.

ETFs: (NYSEARCA:GLD), (IAU), (NUGT), (PHYS), (SIL), (NYSEARCA:SLV), (SIVR)

It remains to be seen whether gold is "becoming an attractive investment again given the rising expectations for interest rate cuts for the start of 2023," said Fawad Razaqzada, market analyst at City Index and FOREX.com, but "ultimately, the dollar has to stop rising before we see gold make a meaningful comeback."

Weighed by the strong dollar and the prospect of further aggressive interest rate hikes, gold futures fell earlier this week to their lowest levels since September.

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