ASX 200 Logs Worst Session in Two Months as Gold Miners Crater Ahead of RBA Decision

• Market Routing: The S&P/ASX 200 shed 1% to hit its lowest close since mid-January, snapping a strong monthly run.

• Sector Drag: Gold stocks led the decline, plunging 7.2% amid hawkish US Fed signals and higher margin requirements.

• Policy Jitters: Investors remain risk-averse as a Reuters poll predicts the RBA will hike rates by 25 basis points on Tuesday.

Australian equities faced a sharp reality check on Monday, posting their steepest single-day decline in two months. A massive sell-off in precious metals miners—triggered by hawkish signals from the U.S.—combined with anxiety over an imminent interest rate hike by the Reserve Bank of Australia to drag the broader market lower.

The benchmark S&P/ASX 200 index (.AXJO) retreated 1% to close at 8,778.60 points, erasing recent gains to hit its lowest finishing level since January 12. This reversal comes on the heels of a bullish January, where the index climbed 1.8% to mark its best performance since August 2025.

Gold Sector Capitulates The materials sector bore the brunt of the selling pressure. The gold sub-index (.AXGD) nosedived, closing down 7.2% for its worst session since late October. Intraday trading saw even steeper volatility, with the sector tumbling as much as 8.9% at one point.

Heavyweights succumbed to the negative sentiment, with Northern Star Resources (NST.AX) plunging 8% and Evolution Mining (EVN.AX) shedding 5%.

The catalyst was a rout in underlying bullion prices, driven by a dual hit of increased CME margin requirements and the nomination of Kevin Warsh as the next Federal Reserve Chair. Markets have interpreted President Trump’s selection of Warsh to succeed Jerome Powell in May as a distinctly hawkish pivot, prompting a repricing of non-yielding assets.

"Overcrowded Trade" Craig Sidney, a senior investment adviser at Shaw and Partners, noted that the gold rally—which saw miners surge 11% in January—was "truly overdue for a correction."

"Being long gold has been an overcrowded trade for some time," Sidney observed. "So a sharp fall in underlying gold price will lead to a share sell-off in the gold stocks."

Sidney added that a "culmination" of factors, including a weaker Australian dollar and soft leads from U.S. equities, placed additional weight on the ASX. The broader mining index (.AXMM) sank 3.3%, with iron ore giants BHP Group (BHP.AX) and Rio Tinto (RIO.AX) slipping 2% and 1%, respectively.

RBA Outlook Closer to home, traders are bracing for the RBA’s Tuesday policy meeting. Following hotter-than-expected inflation data for December, a Reuters poll indicates the central bank is primed to lift the cash rate by a quarter-point.

Elsewhere in the market, risk-off sentiment prevailed. Energy and healthcare (.AXHJ) stocks slid up to 2%, while real estate shares (.AXRE) edged 0.4% lower. Financials (.AXFJ) provided the only notable resistance, bucking the trend to end slightly higher.

Across the Tasman, New Zealand’s benchmark S&P/NZX 50 (.NZ50) finished virtually flat, dipping about 10 points to close at 13,412.44.