Shares of Newcrest Mining Limited (ASX: NCM) have come under heavy fire again today, slipping a further 5.7% to $14.02. They hit a low of $13.75 earlier in the session after ending last week at $15.38.
So What: Shares of Australia's gold producers have enjoyed strong gains over the last month or so thanks to a rising gold price. This was largely due to the expected delay in an interest rate hike from the US Federal Reserve, as well as uncertainties regarding the global economy.
However, the Fed is now widely expected to increase interest rates before the end of the year, making investors think twice about investing their money in the shiny metal (it doesn't offer a yield, after all). The spot gold price is now at US$1,169 an ounce, down from a three-month high of US$1,187 late last week, with further falls possible.
A lower gold price has a negative impact on the miners that produce it as they must sell their product for less. That's likely the reason why Newcrest is down today while Beadell Resources Ltd (ASX: BDR) and Northern Star Resources Ltd (ASX: NST) are also down 5.9% and 2.3% respectively.
EVOLUTION FPO (ASX: EVN), on the other hand, has risen 7.6% after UBS raised its price target to $1.70, up from $1.47 previously.
Now What: As it stands, Australia's gold miners are also benefiting from the weak Australian dollar, which is a big part of the reason why the sector has performed so strongly this year.
In saying that however, gold miners are still a risky bet for long-term investors as so much rests on the strength of the gold price itself. As such, I personally think there are greater long-term investment opportunities outside the sector.
