The Northern Star Resources Ltd (ASX: NST) share price failed to generate positive returns for shareholders in 2021. The stuttering price of gold continued to weigh down on investor sentiment, causing a sell-off in the gold miner's shares.
Over the course of 2021, Northern Star shares lost around 26%, making it one of the worst performers across the sector. In comparison, the share price of fellow miner Newcrest Mining Ltd (ASX: NCM) lost just 5% across the same time frame.
At yesterday's market close, Northern Star shares were up 0.66% to $9.10 apiece. It's worth noting its shares have been on a sharp decline since early November, down 14%.
Why did the Northern Star share price stumble?
The Northern Star share price has fallen drastically since the deterioration of the spot price of gold last year.
Investors traditionally flock to the yellow metal as a safe-haven asset when there is uncertainty in the market. However, with the world moving past COVID-19 along with renewed investor confidence in the US dollar, gold has lost its value.
In the past year, the price of gold soared close to the US$2,000 barrier but has since fallen away. Currently, an ounce of gold is fetching around US$1,792.00. That's 8% down on the US$1,951.34 it was fetching at the start of last year.
The United States Federal Reserve indicated its intent to raise interest rates at least 3 times in 2022. That was because inflation had accelerated to 6.9%, the highest rate in nearly four decades, and unemployment levels were down.
Rising interest rates inversely drag down the price of precious metals, particularly gold, and it appears investors are bracing for the worst.
Nonetheless, Northern Star managing director and CEO Stuart Tonkin recently made an on-market transaction, buying more of the company's shares.
The head honcho picked up 50,000 Northern Star shares at an average price of $8.86 per share or $443,000 worth.
The sale increases Tonkin's existing holding by 4.2%, taking advantage of the recent share price weakness.
What do the brokers think?
A number of brokers believe the Northern Star share price is currently trading at a bargain price.
Last month, multinational investment firm Macquarie Group Ltd (ASX: MQG) improved its outlook on Northern Star shares by 15% to $15 per share. Based on Friday's closing price, this implies an upside of a sizeable 65% for investors.
On the other hand, Swiss investment firm UBS lowered its outlook on the company's shares by 21% to $11.20. While the broker reduced its assessment on Northern Star, it still sees value in the gold miner. The price target represents a potential upside of 23% from where it trades today.
