It hasn't been a great day for shareholders of Australia's leading gold miners.
In early afternoon trade the S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) is down 3.5% after the price of the precious metal neared a one-month low.
At present the spot gold price is fetching US$1,298 an ounce, down almost 4.4% from its September high.
Why is the gold price lower?
Overnight the U.S. Federal Reserve advised that it would start to reverse post-GFC stimulus programme from next month.
Furthermore, the central bank hinted that it would consider one more rate rise this year and a further three rate hikes in 2018.
As rates rise in the United States and risk-free Treasury yields widen, gold loses its allure with investors.
In light of this, unless tensions flare in North Korea I think it is quite likely that the gold price will trend lower over the next 12 months, potentially hitting US$1,000 an ounce by the end of next year.
Unfortunately, I think this would weigh heavily on the shares of gold miners such as Evolution Mining Ltd (ASX: EVN), Newcrest Mining Limited (ASX: NCM), Northern Star Resources Ltd (ASX: NST), Resolute Mining Limited (ASX: RSG), and St Barbara Ltd (ASX: SBM).
This could make it an opportune time to take profit on the gold miners after their recent stellar run.
