Gold-related equities continued their downward slide during Tuesday trading, with spot gold breaking below the $4,310 per ounce level in early Asian hours. The persistent selloff in the precious metals complex has dragged down mining counters across the Hong Kong exchange, reflecting mounting pressure from a strengthening US dollar, rising global bond yields, and surging crude oil prices.

Among the hardest hit, TONGGUAN GOLD (00340) dropped 6.43% to HKD 3.055, while LINGBAO GOLD (03330) fell 4.71% to HKD 20.62. SD GOLD (01787) declined 4.12% to HKD 24.66, and CHIFENG GOLD (06693) retreated 3.27% to HKD 38.40. The sharp correction has pushed gold prices more than 8% below the nearly $4,700 peak recorded just last week, as the global bond rout and dollar strength continue to undermine the yellow metal's appeal.

Where the pressure is coming from

The geopolitical landscape remains fraught with tension, further complicating the inflation outlook. The United States launched a fresh wave of airstrikes against targets inside Iran on Tuesday, prompting retaliatory strikes from Tehran. This marks the second eruption of direct hostilities between Washington and Tehran within just three days, keeping geopolitical risk premiums elevated.

Hawkish signals from the Fed

Adding to the bearish sentiment for gold, Federal Reserve officials have struck a notably hawkish tone. Fed Governor Michael Barr indicated that US inflation has persisted for over five years, and he would support raising interest rates if price pressures do not ease sufficiently. Market participants have quickly priced in this shift, with CME FedWatch data showing the probability of a September rate hike has climbed to 66.9%, a level that continues to weigh heavily on non-yielding bullion.