KEY POINTS
- Gold has fallen more than 25% from its January peak to about US$4,150, pulling ASX gold miners down with it.
- The cause is a strong US dollar and a tougher Fed, not weaker demand for gold.
- Gold’s long-term supports, like heavy central bank buying and global tensions, are still in place.
- For believers, low-cost miners with strong balance sheets look safest; the cautious may wait.
Gold’s huge run higher has hit a wall. The price has fallen for a third week in a row to about US$4,150 an ounce, leaving it more than 25% below the record high of around US$5,600 it reached in January. The drop spread to the ASX on Friday, where Newmont’s (ASX: NEM) local shares fell 6.7%, Evolution Mining (ASX: EVN) lost 5%, and Northern Star (ASX: NST) slipped 2.9%. But here is the key point: people have not stopped wanting gold. This is really about the US dollar and the Fed. So the big question is whether the bull market is over or if this is just a sharp dip.
Why Gold Fell: The Dollar and the Fed
Two things drove the fall. First, the US Federal Reserve, now run by new Chair Kevin Warsh, kept interest rates on hold at its meeting last week but sounded tougher on inflation. Nine of its 19 officials now expect at least one rate rise this year, and markets see about a 70% chance of a hike by September. Second, the US dollar jumped to a 13-month high.
Why does that hurt gold? Gold pays no interest. So when cash and bonds pay more, and the dollar that gold is priced in gets stronger, gold looks less appealing, and money moves out. In our view, this is about the dollar and interest rates, not a sign that gold’s safe-haven role is broken.
- Updated
- INSIDER CONVICTION TRADES FY26
The market hasn't noticed yet.
Disclosed by law. Missed by most investors. 129 trades tracked by us.
NO Credit card
- Director buys & sells tracked
- Buy / Hold / Sell verdict on every stock
- Technical analysis included
The Hit to ASX Gold Miners
Miners earn the gold price, but their costs stay mostly fixed, so their profits swing more than gold itself. On the way down, that means bigger falls. Friday’s drop hit the whole group, from global giant Newmont to local leaders Evolution and Northern Star. Still, it is not all bad. Evolution, for instance, has bounced back strongly from its mid-month low, a sign the selling is not blind panic.
Northern Star has its own problems too, including earlier output cuts and rising costs that have hurt the stock on top of the gold price. The lesson: in a longer pullback, low costs and a strong balance sheet decide who keeps paying dividends and who struggles. Most ASX gold miners are still well above where they were a year ago.
Buy the Dip or Stay Away?
So is this a chance or a trap? The bull case is that gold’s big supports are still there. Central banks have bought at a record pace for three years; about 70% plan to buy more in 2026, and worries about government debt and global tensions have not gone away. Even after cutting its target, Goldman Sachs still sees gold near US$4,900 by the end of 2026, and J.P. Morgan is even more upbeat at about US$6,000, both well above today’s price.
The bear case is simple: if the dollar keeps rising and the Fed stays tough, gold could fall further first. Our take: long-term believers can use this dip to focus on low-cost miners with strong balance sheets. More cautious investors may want to wait until the dollar and the Fed calm down. Either way, expect a bumpy few weeks.
