Gold stocks lead sell-off in Australian shares ahead of central bank meeting
By Shruti Agarwal
Feb 2 (Reuters) - Australian shares clocked their steepest losses in two months on Monday, weighed down by precious and base metal miners, as investors turned cautious ahead of an expected rate hike by the central bank this week.
The S&P/ASX 200 index .AXJO ended 1% lower at 8,778.60 points, its lowest closing level since January 12. The benchmark gained 1.8% last month, its best since August 2025.
Gold miners .AXGD tumbled as much as 8.9% on Monday, their worst day in more than three months, with heavyweights Northern Star Resources NST.AX and Evolution Mining EVN.AX shedding 8% and 5%, respectively.
Gold prices extended their rout following increases in CME precious metals margin requirements, with investors assessing the implications for monetary policy under Kevin Warsh, President Trump's pick to head the Federal Reserve.
U.S. stocks ended lower on Friday following the news of Warsh's nomination, which investors viewed as a hawkish choice to succeed Jerome Powell in May.
A culmination of weaker cues from U.S. equities, a fall in the Australian dollar, and expectations of a local cash rate rise is placing pressure on the ASX, said Craig Sidney, senior investment adviser at Shaw and Partners.
The rally in gold miners - up 11% in January - is "truly overdue for a correction," Sidney said.
"Being long gold has been an overcrowded trade for some time, so a sharp fall in underlying gold price will lead to a share sell-off in the gold stocks."
The mining sub-index .AXMM fell 3.3%, dragged by gold stocks. Iron ore giants BHP Group BHP.AX and Rio Tinto RIO.AX slipped 2% and 1%, respectively, adding to losses.
Meanwhile, the Reserve Bank of Australia is expected to hike its benchmark interest rate by a quarter-point on Tuesday, a Reuters poll showed, after December inflation came in hotter than expected.
Among sectors, healthcare .AXHJ and energy stocks slid as much as 2%, while real estate shares .AXRE inched 0.4% lower. Financials .AXFJ ended slightly higher.
New Zealand's benchmark S&P/NZX 50 index .NZ50 ended about 10 points lower at 13,412.44 points.
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