Although the market has dropped lower today, it hasn’t stopped the gold miners from storming higher.
In early afternoon trade the S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) is up a solid 1.3%.
Some of the biggest movers amongst the gold miners today include the Beadell Resources Ltd (ASX: BDR) share price, the St Barbara Ltd (ASX: SBM) share price, the Regis Resources Limited (ASX: RRL) share price, and the Alkane Resources Limited (ASX: ALK) share price.
Each of these shares has climbed no less than 2% higher, with Alkane Resources a particular highlight with its 10% gain.
Why are the gold miners higher?
According to Reuters, overnight the gold price climbed to a three-week high after European Central Bank President Mario Draghi advised that policymakers plan to discuss potential changes to its bond-buying scheme in the European autumn.
This helped lift the euro to a 14-month high, causing the U.S. dollar, which gold is priced in, to tumble lower once again. The U.S. dollar index is now at an 11-month low.
At the time of writing, the spot gold price is fetching US$1,245 an ounce, up around 2.3% since this time last week.
Is now the time to invest in the gold miners?
Whilst there is a question mark over the pace of interest rate rises in the United States following recent weaker-than-expected economic data, I still wouldn’t be in a rush to invest in the gold miners.
I expect there to be at least two to three rate rises in the United States over the next 12 months, which should result in a stronger U.S. dollar and ultimately a weaker gold price.
But if you’re not as positive on U.S. rate rises as I am and expect the gold price to continue to climb higher, you could do a lot worse than an investment in either Newcrest Mining Limited (ASX: NCM) or Resolute Mining Limited (ASX: RSG).
Where to invest $1,000 right now
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Motley Fool contributor James Mickleboro 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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