Interest Rate Cut Hopes Dashed + Oil Price Surge + Strong US Dollar! Gold and Mining Stocks Hit Hardest
①The ongoing conflict in the Middle East has continued to drive up international oil prices, leading traders to significantly lower their expectations for Federal Reserve interest rate cuts. This resulted in a sharp decline in global gold mining stocks, causing the gold mining index GDM to shift from gains to losses within the year; ②Analysts noted that rising energy costs could push inflation higher, making it more difficult for central banks to cut interest rates, thereby pressuring gold. Since the outbreak of the Middle East conflict, spot gold has fallen by approximately 13% in total.
Amid ongoing conflicts in the Middle East driving up international oil prices, traders have significantly lowered their expectations for Federal Reserve rate cuts, resulting in a sharp decline in global gold mining stocks, turning year-to-date gains into losses.
During Thursday’s (March 19) U.S. stock trading session, the NYSE Arca Gold Miners Index (GDM) once fell by 10%, hitting its lowest level since December of last year.
This index covers multiple mining companies listed in the United States, Canada, the United Kingdom, and Australia. On March 2 (the first trading day after the U.S. and Israel launched military strikes against Iran), its year-to-date gains had expanded to 35%, but have since continued to decline.
The day before, the Israeli Defense Forces attacked facilities related to the South Pars gas field in Bushehr Province, southern Iran. Subsequently, Iran added key energy facilities in Qatar, Saudi Arabia, and the UAE to its target list, also attacking the Qatar Ras Laffan LNG base.
Within the day,$Crude Oil Futures (MAY6) (CLmain.US)$Intraday, prices surged above $100 per barrel. Analysts noted that rising energy costs could push inflation higher, making it more difficult for central banks to cut interest rates, thus pressuring gold. Since the outbreak of the Middle East conflict, $XAU/USD (XAUUSD.CFD)$gold has fallen approximately 13% cumulatively.
As gold itself does not generate income, it performs better in a low-interest-rate environment. Traders no longer expect the Federal Reserve to ease monetary policy this year, and have even begun hedging against potential rate hikes by the central bank.
Jefferies analyst Christopher Lafemina stated in a report: ‘Investors are currently focused on the profit margins of gold mining companies, as well as the ‘double whammy’ brought by falling gold prices and rising energy and consumables costs.’
Lafemina added, ‘In the scenario of prolonged conflict, higher interest rate expectations and a stronger U.S. dollar may further weigh on gold.’
Another factor weighing on gold is the US dollar emerging as the primary safe-haven asset amid the conflict. This month, $USD (USDindex.FX)$the dollar has risen by about 1.8%. Given that gold is priced in dollars, this increases the relative cost for holders of other currencies to purchase gold.
In 2025, against the backdrop of the US Dollar Index falling by more than 9%, gold mining stocks attracted substantial capital inflows.
$Newmont (NEM.US)$ 、 $Agnico Eagle (AEM.US)$ and $Barrick Mining (B.US)$The performance of gold in 2025 has seen gains exceeding 100% year-to-date—resembling speculative assets rather than a traditional safe-haven metal. As the war continues, some investors have started to sell off these stocks.
Matthew Tuttle, CEO of Tuttle Capital Management, stated: ‘When market volatility intensifies, investors sell off all liquid assets, and mining stocks are among them.’
‘Coupled with concerns over prolonged high oil prices, this results in rapid and severe deleveraging, affecting even companies still generating cash flow.’
Analysts noted that although declining gold prices will weigh on revenues, large mining companies may benefit from a buffer created by the significant rise in gold prices in recent years—after all, since the end of 2023, gold prices have surged by more than 120%.
Tuttle also believes that if oil prices stabilize and pressures from interest rates and the US dollar ease, companies like Newmont and Agnico Eagle, which hold net cash, maintain low costs, and possess high-quality assets, could still see a rebound.
Editor/KOKO
