Why the Evolution Mining (ASX:EVN) share price is slumping to a 52-week low

Shares in the Aussie gold miner remain under pressure as investors watch monetary policy and yields worldwide.

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The Evolution Mining Ltd (ASX: EVN) share price has been smashed in 2021. Shares in the Aussie gold miner fell 6.4% on Tuesday and are now down 36.6% year to date.

Yesterday’s slump has seen Evolution hit a new 52-week low. The company now boasts a $6.1 billion market capitalisation, but things have been tough for shareholders.

So, what’s driving the Aussie miner’s valuation lower right now?

Why the Evolution Mining share price is slumping to a 52-week low

There has been no price-sensitive news from the Aussie miner since it announced the completion of its share purchase plan on 26 August.

However, as an ASX resources share, underlying commodity prices can often tell a story.

Evolution is targeting 700,000 to 760,000 ounces of gold production in FY2022 after recording a $354.3 million underlying profit last financial year. Naturally, global gold prices will have a big part to play in the group’s revenues in FY2022.

Right now, things aren’t looking so good. Gold prices slid more than 1% overnight to a near 6-month low as US yields climbed higher.

Gold is historically seen as a safe-haven asset and a good hedge against inflation. Hiking interest rates is one of the tools used by central banks to curb spending and reduce inflation. That means fears of higher interest rates usually spell bad news for gold prices.

It has also spelled bad news for the Evolution Mining share price. Shares in the Aussie gold miner remain under pressure as investors watch monetary policy and yields around the world.

An earlier than expected rate hike from the US Federal Open Market Committee (FOMC) could see Evolution’s valuation sink even lower. However, nothing is certain in the markets, especially in the current climate.

That means investors will be keeping a close eye on the Evolution Mining share price given its current levels.

Should you invest $1,000 in Evolution Mining right now?

Before you consider Evolution Mining, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Evolution Mining wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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