Gold Falls to Two-Month Lows as Inflation Fears Return

Ved Shah

Good evening ladies and gentlemen, and welcome back to The Australian Gold Mid-Weekly Review.

It has been another challenging week for precious metals, with gold currently trading at approximately US$4,090 per ounce and silver sitting around US$64 per ounce. Both metals are now trading at two-month lows as investors continue to reassess the outlook for inflation and interest rates.

Several factors have contributed to the recent weakness. A stronger-than-expected US jobs report reduced expectations for near-term interest rate cuts, while ongoing tensions in the Middle East have increased concerns around supply-driven inflation. Markets have also been adjusting to expectations surrounding future Federal Reserve leadership, which has further pushed rate expectations higher.

Oil is currently trading at approximately US$90.58 per barrel, supported by continued uncertainty surrounding the conflict between the United States and Iran. While geopolitical tensions would traditionally support gold prices, investors remain more focused on the inflationary consequences of higher energy prices and the prospect of interest rates remaining elevated for longer.

The ASX gold sector has reflected this weaker sentiment. The ASX All Ordinaries Gold Index is currently sitting at approximately 14,642 points, representing a decline of more than 1,300 points from recent levels as investors continue to reduce exposure across the broader gold equity sector.

Turning to company news, Sunshine Metals attracted attention this week following the sale of its non-core Hodgkinson project for $250,000 in cash. While the transaction itself is relatively small, it highlights management's continued focus on advancing its key growth assets, including Liontown, Mt Moss and the emerging Sybil prospect.

The company remains on track toward its first gold production target in mid-2027 and has several potential catalysts approaching over the next few months, including drilling activities at Sybil, resource updates at Liontown and ongoing development work at Mt Moss.

Meanwhile, Medallion Metals provided a significant construction update for its Ravensthorpe Gold Project in Western Australia. Front End Engineering and Design work has now been completed, confirming that previously announced capital cost estimates remain on track. The company has also executed a $7.6 million Early Works Agreement and remains on schedule to sign its full construction contract in July.

Importantly, major processing equipment continues to progress toward delivery, while permitting activities for underground mine development remain ongoing. Management continues to target first gold production during the second quarter of 2027.

Both companies remain firmly in the development stage, meaning execution, permitting and funding risks remain key considerations for investors. However, both also have several meaningful catalysts approaching over the coming months that could influence market sentiment.

And that's it for this week's mid-week update.

Thank you for tuning in, and as always, we'll continue to bring you timely insights every Thursday to help guide your investment decisions. We look forward to seeing you again this Sunday for the next episode of The Australian Gold Weekly Review.