Why Gold Mining Stocks Are Under Pressure Today

Gold Mining Stocks Retreat As Gold Moves Below The $1800 Level

Gold mining stocks are under strong pressure today as gold declined below the $1800 level after Fed indicated that it expected two rate hikes in 2023.

The weakness is broad, and notable gold mining stocks like Barrick Gold, Newmont Corporation, Kinross Gold or Yamana Gold are down by 4 – 6% in today’s trading session.

Most gold mining stocks have already lost a lot of ground in June as gold’s previous rally was stopped near the $1900 level and traders began to take profits in shares of gold miners.

The recent sell-off in the gold market put additional pressure on gold mining stocks which are now trading at levels that were seen back in April.

What’s Next For Gold Mining Stocks?

Near-term dynamics of gold mining stocks will depend on the dynamics of the gold market. Gold moved from $1900 to $1775 in just five trading sessions and its RSI reached the oversold territory, so the chances of a rebound are increasing.

It should be noted that gold mining stocks provide investors and traders with leverage to the price of gold. This leverage works both ways so gold mining stocks are typically declining faster than the price of gold in case gold moves lower.

Gold mining stocks have started to pull back after rally in March – May before gold began to lsoe ground at a fast pace, so some traders were prepared to the recent sell-off.

However, it remains to be seen whether traders will rush into the segment in the current market environment as higher interest rates present a serious threat to precious metals.

I’d note that Treasury yields have failed to gain additional upside momentum after yesterday’s rally, and the yield of 10-year Treasuries declined from 1.59% to 1.53%. If bond markets calm down, gold prices will stabilize, and gold mining stocks will have a good chance to rebound from current levels.

For a look at all of today’s economic events, check out our economic calendar.