Australia's ASX-listed gold stocks had a day to forget, after the S&P/ASX All Ords Gold (Index: AXGD) (ASX: XGD) dropped 1.3%.
Overnight, the spot gold price fell 0.5%, to US$1,286.30 an ounce, but clearly, the market expects more falls to come, despite expectations that the Euro currency is likely to weaken as the European Central Bank (ECB) implements its trillion Euro quantitative easing program.
The main driver appears to increasing speculation that the US Federal Reserve may raise interest rates sooner than expected. When the Fed does raise interest rates, demand for non-interest bearing assets such as gold is likely to fall while making other assets more attractive.
Among the gold miners, the biggest losers were Troy Resources Ltd (ASX: TRY), Beadell Resources Ltd (ASX: BDR) and Perseus Mining Ltd (ASX: PRU), which fell 8.3%, 7.4% and 5.2% respectively.
Behind them came a slew of other gold miners, Saracen Mineral Holdings Limited (ASX: SAR), Resolute Mining Limited (ASX: RSG) and Silver Lake Resources Limited (ASX: SLR).
While many Australian-based gold miners will be benefitting from significant falls in the Australian dollar price of gold – around A$1,627 an ounce – many are struggling to contain their all-in sustaining costs.
And for those such as Kingsgate Consolidated Limited (ASX: KCN) and Medusa Mining Limited (ASX: MML) with the majority of their operations offshore – it provides very little benefit.
The miners tend to be heavily influenced by even small daily fluctuations in the spot price of gold – it's likely to continue while there's so much uncertainty in the markets.
