Rate Cut Dreams Shattered + Oil Prices Soar, Gold Mining Index's 35% YTD Gains Wiped Out

Due to ongoing Middle East conflicts pushing up international oil prices, traders have significantly lowered expectations for a Federal Reserve rate cut, leading to a sharp decline in global gold mining stocks, turning from gains to losses this year.

On Thursday (March 19), during U.S. stock trading, the NYSE Arca Gold Miners Index (GDM) once fell 10%, hitting its lowest level since December last year.

The index includes multiple mining companies listed in the U.S., Canada, the UK, and Australia. On March 2 (the first trading day after the U.S. and Israel launched military strikes on Iran), it temporarily increased its year-to-date gains to 35%, but has since continued to decline.

The day before, the Israeli Defense Forces attacked facilities related to the South Pars gas field in southern Iran’s Bushehr Province. Subsequently, Iran listed several key energy facilities in Qatar, Saudi Arabia, and the UAE for strikes, and attacked Qatar’s Ras Laffan LNG terminal.

Within the day, U.S. WTI crude oil prices broke above $100 per barrel. Analysts say rising energy costs could boost inflation, making it harder for central banks worldwide to cut interest rates, thereby putting pressure on gold. Since the outbreak of Middle East conflicts, spot gold has fallen approximately 13%.

Since gold itself does not generate income, it performs better in low-interest-rate environments. Now, traders no longer expect the Federal Reserve to ease monetary policy this year and are even hedging against potential rate hikes.

J.P. Morgan analyst Christopher Lafemina stated in a report, “Currently, investors are focused on the profit margins of gold mining companies and the ‘double blow’ from falling gold prices and rising energy and consumables costs.”

Lafemina added, “In a prolonged conflict scenario, higher interest rate expectations and a stronger dollar could further suppress gold prices.”

Another factor weighing on gold is the dollar becoming a primary safe-haven asset amid the conflict. This month, the dollar index has risen about 1.8%. Since gold is priced in dollars, this increases the cost for holders of other currencies to buy gold.

In 2025, amid a more than 9% decline in the dollar index, gold mining stocks attracted significant inflows.

Newmont, Agnico Eagle Mines, and Barrick Gold all saw gains exceeding 100% in 2025—performance more akin to speculative assets rather than traditional safe-haven metals. As the war continues, some investors are beginning to sell these stocks.

Matthew Tuttle, CEO of Tuttle Capital Management, said, “When market volatility increases, investors tend to sell all liquid assets, and mining stocks are among them.”

“Coupled with concerns about prolonged high oil prices, this leads to rapid and intense deleveraging, even for companies still generating cash flow.”

Some analysts note that although falling gold prices will drag down revenues, large mining companies may have some buffer due to significant gold price increases in recent years—after all, gold has risen over 120% since the end of 2023.

Tuttle also believes that if oil prices stabilize and pressures from interest rates and the dollar ease, companies like Newmont and Agnico Eagle, which have net cash, low costs, and high-quality assets, could rebound.