The Evolution share price hit a 52-week low this month. Here's why

The Evolution share price has dived in recent times.

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Key points

  • Evolution shares sink 6.23% to $3.46 at Monday's market close
  • The fall in gold prices has impacted the gold miner's shares
  • This is being brought upon sharp rates hikes by the Federal Reserve as it uses its toolkit to cool down inflation

The Evolution Mining Ltd (ASX: EVN) share price backtracked more than 6% yesterday despite no news from the company.

The gold miner's shares closed at $3.46, meaning it's roughly 7% off its 52-week low of $3.23 recorded last week.

In comparison, the S&P/ASX 200 Index (ASX: XJO) continued its steep fall from 8 June, falling 0.64% on Monday.

Over the past 2 weeks, this represents a decline of around 10%.

What's impacting Evolution shares lately?

Investors have been dumping the Evolution share price following a volatile couple of weeks across global markets.

The United States Federal Reserve lifted its official cash rate by 0.75% last Wednesday which rattled financial markets.

The aggressive move to tighten up its monetary policy led investors to shift from safe-haven assets like gold to government bonds.

Essentially, this dampens the price of the yellow metal which plunged almost to the psychological barrier of US$1,800 per ounce.

For now, there's been a slight rebound to US$1,840 per ounce, but how long that can hold depends on the central bank.

One major telling sign will be the United States consumer price index report which is set to be released on 10 June. This will indicate how much inflation has spiked for the month and whether the Federal Reserve will lift interest rates.

Nonetheless, a decline in the value of gold translates to a loss of potential revenue for Evolution.

In its March quarterly report, the company noted that gold production came to 467,553 ounces for the year-to-date.

However, all-in sustaining costs (ASIC) stood at approximately US$870 (A$1,249) per ounce.

This means that with the average gold price sold at US$1,674 (A$2,402), Evolution is making around US$803 (A$1,153) profit for every ounce sold.

Evolution share price summary

A roller-coaster 12 months has seen the Evolution share price register a loss of about 25%.

It's worth noting that in April 2022, the company's shares reached a near 52-week high of 4.75% before tumbling thereafter.

Evolution commands a market capitalisation of around $6.76 billion.

Motley Fool contributor Aaron Teboneras 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 Scott Phillips.

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