Gold-Mining Stocks Jump After U.S.-Iran Cease-Fire
By Sherry Qin
Gold-mining stocks jumped as prices of gold and silver rebounded after the U.S. and Iran agreed to a conditional two-week cease-fire, with Tehran allowing ships safe passage through the Strait of Hormuz.
Shares of China’s largest mining company, Zijin Mining Group, climbed 6.9% in Shanghai and 6.7% in Hong Kong on Wednesday. Shandong Gold-Mining’s H shares advanced 9.0% and Zijin Gold International added 7.5%.
Spot gold was recently 2.1% higher at $4,800.22 a troy ounce, and spot silver was up 4.5% at $76.25 a troy ounce.
Prices of precious metals, often viewed as a hedge against geopolitical risks, have been tumbling from all-time highs since the start of the Middle East conflict as soaring oil prices ignited fears of high inflation and dimmed the prospect of interest-rate cuts. Gold also faced pressure from some investors cashing out their gains to cover losses elsewhere.
“Safe-haven demand has been overshadowed by higher energy prices, a stronger dollar and shifting rate expectations,” ING commodities strategist Ewa Manthey said in a recent note.
Rising energy prices have increased the inflation risk and complicated the path for monetary easing. If the cease-fire holds and the strait reopens, the conflict could be viewed as a short-term price shock and central banks could broadly resume on the paths they were on before the Iran war, said Aberdeen Investments emerging-markets economist Michael Langham.
If shipping volumes return to normal levels over the two weeks, it will lead to a more definitive, long-term cease-fire and support gold’s upward trajectory, DBS’s Eugene Leow wrote in a note.
Gold’s structural demand remains robust, as China’s central bank extended its purchasing streak to 17 consecutive months, adding 160,000 troy ounces to its reserves in March, Leow said.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
04-08-26 0118ET
