The Australian share market may be tumbling lower again on Wednesday, but that hasn't stopped one group of shares from surging higher.
In early trade the majority of Australia's leading gold miners are trading notably higher.
Here's a summary of how some of the bigger players are performing today:
- The Evolution Mining Ltd (ASX: EVN) share price is up 3% to $4.21.
- The Newcrest Mining Limited (ASX: NCM) share price has climbed 4% to $28.19.
- The Northern Star Resources Ltd (ASX: NST) share price has jumped 6% to $14.01.
- The Saracen Mineral Holdings Limited (ASX: SAR) share price has surged 7.5% higher to $4.17.
- The St Barbara Ltd (ASX: SBM) share price is up 4% to $2.59.
This has led to the S&P/ASX All Ordinaries Gold index storming an impressive 4.3% higher during morning trade.
Why are the gold miners surging higher?
Investors have been buying the gold miners for two reasons.
The first is due to increasing demand for safe haven assets after the U.S. and Australian share markets came under pressure again.
The other catalyst was a surprise interest rate cut in the United States by the Federal Reserve. Not only did the central bank make the cut two weeks before its actual meeting, but it took it down by 0.5%.
As we saw yesterday with the Reserve Bank, central banks tend to make quarter percentage point moves when they change rates. But the Federal Reserve appears very concerned with the coronavirus outbreak and has acted swiftly.
It said: "The coronavirus poses evolving risks to economic activity. In light of these risks and in support of achieving its maximum employment and price stability goals, the Federal Open Market Committee decided today to lower the target range for the federal funds rate."
This surprise interest rate cut sent the gold price hurtling higher. The gold price is currently changing hands at US1,648 an ounce according to CNBC, which is up 3% since this time yesterday.
