Gold Price Down: The Share Prices of These Aussie Gold Miners Are Tanking

The gold price fell further overnight, putting even more pressure on the gold miner’s share prices this morning.

The Evolution Mining Ltd (ASX: EVN) share price, for instance, is down 2.1% early on Wednesday, the Northern Star Resources Ltd (ASX: NST) share price is down 2.7% and the St Barbara Ltd (ASX: SBM) share price has fallen 1.3%.

Those shares, along with a number of other gold miners, enjoyed strong gains at the beginning of the year as the gold price soared higher. Over the past month, however, they have fallen 17.8%, 8.6% and 17.2% respectively.

What’s happened?

The gold miners’ share prices are often heavily influenced by the price of gold itself. After all, the miners sell the shiny metal, so higher prices lead to greater revenues.

Although the gold price rose strongly between mid-December and late-February, it has since retreated steadily. One ounce of gold is now fetching US$1,215, down from almost US$1,260 late last month.

What’s more, there are also fears that higher interest rates in the United States (the US Federal Reserve is likely to hike interest rates a number of times in 2017) will drive the gold price lower still, which is likely impacting the market’s confidence that the gold miners are a good buy at their current prices.

What happens now?

Unfortunately, there is no way to know for sure which direction the gold price will go from here. But if US interest rates do rise and the US dollar strengthens, that appears likely to force the gold price lower.

One way or another, the gold miners themselves have no control over the gold price. If it does continue to fall, I wouldn’t want to be left holding their shares…

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. 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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