Australian gold miners plunge as gold price sinks

A 1.6% fall in the spot gold price overnight has seen the ASX-listed gold miners hammered.

Spot gold fell 1.6% to US$1,333 an ounce after peaking at US$1,370 an ounce earlier this month as the chart below indicates.

Spot gold price 13 Jul 2016


The fall has been blamed on stronger US economic data, particularly after US non-farm employment data for June 2016 easily beat market expectations. That could see the US Federal Reserve push ahead with its plans to raise interest rates – making bonds more attractive and gold less attractive.

In early trading, gold miners have seen their share prices sink as the following table shows.

Company Fall
Burey Gold Limited (ASX: BYR) -9.5%
Orinoco Gold Ltd (ASX: OGX) -6.9%
Troy Resources Ltd (ASX: TRY) -6.7%
Blackham Resources Ltd (ASX: BLK) -6.5%
St Barbara Ltd (ASX: SBM) -4.4%
Ramelius Resources Limited (ASX: RMS) -4.2%
Resolute Mining Limited (ASX: RSG) -4.2%
Beadell Resources Ltd (ASX: BDR) -4.0%
Regis Resources Limited (ASX: RRL) -4.0%
Silver Lake Resources Limited. (ASX: SLR) -3.8%
Perseus Mining Limited (ASX: PRU) -3.4%
Newcrest Mining Limited (ASX: NCM) -3.2%
Northern Star Resources Ltd (ASX: NST) -3.1%
OceanaGold Corporation (ASX: OGC) -2.8%

Source: Google Finance

However, the falls may be overdone, given many Australian-based miners are making huge margins on gold priced in Australian dollars. With an exchange rate of around 76.13 US cents, that equates to a price of A$1,754 an ounce. A number of the miners listed above have all in sustaining costs of around A$1,000 an ounce, so they are making substantial margins.

Foolish takeaway

As the US economy continues to strengthen, despite woes in other parts of the world – like Europe and China – gold is likely to come under more selling pressure. That could see the gold miners hit even harder.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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