Gold price erases 2026 gains: cost-of-carry and project impacts for miners
Reviewed by Tom Sullivan
First reported on MINING.com
30 Second Briefing
Gold fell as much as 3.5% to $4,315/oz, its lowest since March, erasing 2026 gains after a strong US May nonfarm payrolls print pushed Treasury yields and the dollar higher and lifted Fed rate hike odds. US gold futures dropped over 3.2% to $4,342/oz, with CME FedWatch now pricing about a 68% chance of a December hike versus roughly 50% pre-data. Since the Iran war began and the Strait of Hormuz closure drove energy prices up, bullion has slid nearly 18%, raising the cost of carry for non-yielding gold.
Technical Brief
- Spot bullion previously peaked near $5,600/oz in January before reversing the entire year-to-date move.
- Since the Iran war began, gold has declined almost 18% from that January high.
- Strait of Hormuz closure has driven “very large” energy prices, feeding inflation expectations and rate pressure.
- TD Securities’ Bart Melek links elevated inflation and energy costs directly to a higher cost of carry for bullion.
- Stronger-than-expected US May nonfarm payrolls data triggered the latest sharp leg down in gold.
- Post‑data, both US Treasury yields and the dollar jumped, worsening relative returns for non‑yielding gold holdings.
Our Take
Across our recent gold coverage, TD Securities and Sprott Money recur as quoted houses in both this US rate‑driven selloff and the May 7 rebound piece, suggesting miners and developers are getting a fairly unified message from bullion strategists about heightened macro‑driven volatility rather than mine‑supply fundamentals.
The 18% gold price drop since the start of the Middle East war, alongside the May 4 article showing a 13% slide by early May, signals that geopolitical risk premia have been more than offset by the Federal Reserve’s tightening bias, which is likely to keep project hurdle rates and financing costs elevated for gold, silver and copper developers in the United States and Mexico.
With critical minerals and copper also tagged in this piece and in the FAST‑41‑backed Arctic project article from May 17, the current gold drawdown may push diversified developers to lean harder on US policy support for copper and critical minerals, rather than relying on bullion prices alone to underpin new project economics.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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