Gold-related stocks are among the biggest decliners in the Hong Kong market. At the time of writing, Lingbao Gold (03330) fell 6.51% to HK$12.93. Zijin Mining Group International (02259) dropped 5.71% to HK$102.3. Chifeng Jilong Gold Mining (06693) declined 5.32% to HK$25.62. SD GOLD (01787) was down 4.72% to HK$21.
The weakness follows a significant drop in the spot gold price, which fell below the $4,200 per ounce level on June 10th, hitting its lowest point in two and a half months. This move was largely driven by a much stronger-than-expected U.S. non-farm payrolls report released on Friday, which has fueled expectations for further interest rate hikes by the Federal Reserve. Market participants are also looking ahead to the U.S. Consumer Price Index data scheduled for release this Wednesday, which could exert additional influence on gold's future direction.
Adding to the bearish sentiment, Citi has issued a research report maintaining a negative outlook on gold and lowering its zero-to-three-month target price from $4,300 to $4,000 per ounce. The report suggests that sustaining the current gold price level requires physical gold purchases to continue at an annual pace of approximately $900 billion. The bank expressed concern that if the Strait of Hormuz remains closed throughout the summer, physical buying could decline to an annual range of $700 billion to $750 billion. Such a reduction, Citi notes, could mechanically push gold prices back to levels seen nine to ten months ago, around $3,500 per ounce.
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