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Gold price plunge spurs CNMC Goldmine selloff
GOLD producer CNMC Goldmine fell on Wednesday after gold prices suffered their biggest daily decline since June 2013.
By 10.53am, the counter was trading at S$0.54, down three cents or 5.3 per cent. Nearly seven million shares worth S$3.7 million were traded.
OCBC Bank economist Barnabas Gan said in a Wednesday note that the gold price had fallen below its US$1,300 per ounce support to US$1,266.30, a day after a hawkish Fed voting member gave a speech.
A recent rise in oil prices could lead to inflationary pressures, which can influence a Fed hike decision, he said.
Higher interest rates typically lead to a stronger US dollar, leading to fewer worries over currency depreciation that explains why some people buy gold.
"As quickly as gold fell, as quickly could gold rally back," Mr Gan said.
"We still think that uncertainties into the next 12 months, including November's US presidential elections and UK triggering of Article 50 somewhere in 2017, will encourage persistent demand into safe haven assets like gold.
"Elsewhere, should potentially higher US shale oil production and rig-count spook oil prices lower, a phenomenon already seen in mid-2016, the revert back to weak inflationary pressures may once again lift gold prices back to its previous shine."