This week Gold saw its sharpest sell off since 2020, while small mining stocks got a bump from a critical minerals deal signed between Australia and the US.

Welcome to the Morningstar Market Minute, where we recap the key events of the week in financial markets, and how we are positioning the Morningstar portfolios.

Gold saw a sharp sell off falling 5% from its all time highs this week.

Having enjoyed a spectacular rally year to date on the so-called ‘debasement trade’ the volatility reminds us that the asset can still be vulnerable to speculative excess. Indeed, with cash flows to underpin its fundamental valuation, and a relatively small tradable market drawdown risk has long been a feature to be aware of.

Meanwhile, the highlight of our Prime Minister’s visit to the US was the signing of strategic framework agreement to invest in mining and processing of critical minerals and rare earths. The announcement saw a strong rally in a number of small rare earths exposed stocks on the ASX. However it’s important to note its too early to quantify the specific beneficiaries of the deal.

Elsewhere all eyes will be on US CPI data which will be released Friday night our time, ahead on of the next Federal Reserve meeting next week.

At Morningstar we don’t want to get caught up in short term fads, but rather anchor ourselves in long term fundamental valuation. Long-term investing success is about the consistent application of a strategy, rather than short term speculation.

Well that’s it for this week. We look forwarded to seeing you again next Friday.