Gold slips, silver drops as dollar rebound hits LatAm miners
A dollar surge triggered by Strait of Hormuz oil fears erased gold's early safe-haven gains and punished silver, pressuring Latin American mining equities ahead of US inflation data.
Gold settled at $4,371 an ounce on Tuesday, down 0.70%, after an intraday spike above $4,400 triggered by Iranian military activity in the Strait of Hormuz quickly reversed. Silver fared worse, dropping 1.59% to $64.78 an ounce as the session shifted from a geopolitical risk premium to a macroeconomic squeeze.
The reversal was driven by crude oil's rally toward $90 a barrel. The energy spike revived fears that a new supply shock would force the Federal Reserve to keep interest rates elevated to combat inflation. As real yields and the dollar firmed, non-yielding assets lost their appeal, prompting momentum funds to liquidate positions and lock in profits ahead of Wednesday's US consumer price index report.
This price action carries immediate fiscal and equity consequences for Latin America. Mexico and Peru account for roughly 40% of global mined silver. Because silver behaves as an industrial metal, the demand destruction implied by higher oil prices dragged it down alongside equity futures. The drop to $64.78 directly pressures the share prices of major producers like Fresnillo, Industrias Peñoles, and Pan American Silver, while also threatening tax revenues in Mexican mining states.
Gold miners face a more favorable calculus. Despite the daily pullback, a $4,371 print remains near a two-month high, providing Peruvian operators with wide margins over all-in sustaining costs. This dynamic helped cushion the Lima general index even as base metals wobbled.
In Brazil, the broader market reflected the same pre-data risk reduction. The Ibovespa closed down 2.50% at 167,875 in São Paulo. However, a rotation into real assets insulated some miners, with CSN Mineração gaining 2.01% to close at R$5.53. Furthermore, mid-tier producers continue to attract capital based on operational momentum rather than macro trends. Integra Resources reported a 30% jump in quarterly gold production, underscoring why expanding LatAm-focused miners are drawing bids even as global sentiment turns cautious.
