Why is the Northern Star (ASX:NST) share price sinking 3% today?

What’s got Northern Star on the run today?

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a woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression, on her face.

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Unfortunately, the S&P/ASX 200 Index (ASX: XJO) has not kicked off the trading week on a good note so far this Monday. At the time of writing, the ASX 200 is down by 0.43% at 7,364 points. But the news is a little worse for the Northern Star Resources Ltd (ASX: NST) share price.

Northern Star shares are currently down by a nasty 3.15% so far today at $10.13 a share. I don’t need to tell you that’s a significant underperformance of the broader market.

So what’s up with this ASX 200 gold miner today?

Why is the Northern Star share price struggling on Monday?

Well, to (hopefully) answer that, let’s dig into what Northern Star does (apologies for the poor pun). So, Northern Star is the second-largest gold miner on the ASX, after Newcrest Mining Ltd (ASX: NCM). It became so after its merger with the old Saracen Mining Ltd (SAR) that was completed earlier this year.

Like almost all mining companies, Northern Star’s profitability rides or dies on the underlying price of the commodity (or commodities) that it mines. In this case, it is the price of gold itself.

And gold has indeed come off the boil over the past few days. It was fetching a price of around US$1,870 an ounce last week but is today only asking around US$1,850 for that same ounce.

It is this swing that’s probably weighing heavily on Northern Star shares today.

That might be why we are seeing not just Northern Star but the entire ASX gold mining sector come under pressure today. Newcrest shares are also down heavily, having lost 2.17% so far today at $24.30 a share. Gold Road Resources Ltd (ASX: GOR) is down by 2.69% at $1.625, while Perseus Mining Limited (ASX: PRU) shares have lost 1.93% at $1.775 each so far. Evolution Mining Ltd (ASX: EVN) is down 2.83% so far at $4.295 a share. This indicates that it is a sector-wide malaise going on today.

At the current Northern Star share price of $10.13, this gold miner has a market capitalisation of $11.8 billion, with a dividend yield of 1.87%.

Should you invest $1,000 in Northern Star right now?

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Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining Limited. 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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