Australia’s gold miners have been hammered in early morning trade, after the spot gold price dropped 2.1% to US$1,265.42 an ounce overnight.
Evolution Mining Ltd (ASX: EVN), Alacer Gold Corp (ASX: AQG) and Perseus Mining Limited (ASX: PRU) have been crunched, losing 6.6%, 6.5% and 6.4% respectively. Kingsgate Consolidated Limited (ASX: KCN) and Beadell Resources Ltd (ASX: BDR) have fared almost as bad, losing 5.3% and 5.2%.
The gold price has fallen to its lowest level in 15 weeks, after treading water in recent weeks. Concerns over tensions between Ukraine and Russia have propped up the gold price, while traders have been down on the metal, as the US economy improves – hence less need to buy gold as a ‘safety’ investment.
But news that tensions in Eastern Europe may be dying down thanks to a weekend presidential election and stronger US economic data combined to sink the gold price. However, gold could still rise, as pro-Western billionaire Petro Poroshenko is reportedly ‘not pro-Russia’. That could cause more uncertainty and political risk in the region.
The World Gold Council also reported weak demand for physical gold from top gold consumers China and India in the first quarter this year, and investors continue to pull money out of the SPDR Gold Trust – the world’s largest physically-backed gold exchange traded fund.
Given the volatility of the gold price, gold miners could see even more falls from here.