The S&P/ASX 200 Index (ASX: XJO) has had a rather volatile week or so over the past 5 trading days. Since last Wednesday, the ASX 200 has gone backwards by around 0.3%. That's despite the healthy 1.38% bump the index is enjoying so far today (at the time of writing). But one ASX 200 share that's fared far worse over the past week has been the Northern Star Resources Ltd (ASX: NST) share price.
Northern Star shares are today up 0.55% so far at $9.08 a share. But over the past week, this ASX 200 gold miner has lost around 2% of its value. Since last Thursday, it's been a loss of 4.3%.
That's a performance that severely trails the broader market. So what's going on with Northern Star?
Why has the Northern Star share price had such a lousy week?
Well, our first clue is the gold price itself. As a gold miner, Northern Star's fortunes are intrinsically tied to the price of the precious metal it mines. So, according to Bloomberg, gold has indeed fallen in value over the past week. Gold spot prices were asking just under US$1,800 an ounce a week ago. But today, the yellow metal is going for US$1,787 an ounce. That's a small but not insignificant drop of roughly 0.72%.
Another factor to consider is inflation. There has been much talk of inflation and higher interest rates over the past week or so. Just yesterday, the Reserve Bank of Australia (RBA) abandoned its 'yield curve controls' and is now expecting to raise interest rates in 2023 rather than the previously-flagged 2024.
This is relevant to the Northern Star share price since gold is an asset that is greatly affected by interest rate rises. That's because gold pays no yield. Thus, its appeal theoretically diminishes if other 'safe' assets like government bonds are paying higher interest rates.
So, if it's macro-factors like the gold price and the threat of higher inflation and interest rates that are holding Northern Star shares down, then surely Northern Star wouldn't be the only ASX gold miner struggling over the past week? Indeed, that seems to be the case. Other ASX gold miners like Perseus Mining Limited (ASX: PRU) and Newcrest Mining Ltd (ASX: NCM) have also gone backwards by similar amounts since last Wednesday.
So if you own Northern Star shares, you can probably place at least part of the blame for the past week at a lower gold price and higher inflation expectations.
At the current Northern Star share price, this ASX 200 gold miner has a market capitalisation of $10.55 billion and a dividend yield of 2.1%.
