What happened
Bank of America commodity strategists warned that rising bond yields, driven by high crude oil prices and elevated inflation, could push gold prices down by up to $1,400 an ounce next year. The combination of higher real interest rates and a stronger US dollar is blunting precious metal momentum, counteracting traditional safe-haven demand stemming from Middle East geopolitical tensions.
Why it matters here
ASX-listed gold miners have enjoyed record earnings during the precious metal's recent bull run. However, if oil-driven inflation forces global central banks to keep interest rates higher, rising real bond yields make non-yielding assets like gold less attractive. Australian gold equities could face margin compression from both falling bullion revenue and elevated diesel operating costs at mine sites.
What to watch
Global benchmark crude oil price movements, US 10-year Treasury bond yield shifts, and upcoming quarterly cash cost reports from major ASX gold producers.
Source
afr.com