The price of gold has been sliding into the red since peaking at US$2,052 per troy ounce on 8 March 2022 to now trade at US$1,716/t.oz.
Pressure from a strong USD and rising interest rates has seen demand for bullion drop to new lows, reports say.
"[G]old prices remained about 16% off the year to date high as higher interest rates and a relatively strong dollar continued to pressure bullion demand," Trading Economics wrote.
The opportunity cost of holding gold increases with rising yields as the yellow metal pays no interest/yield.
Meanwhile, shares of key ASX gold player Northern Star Resources Ltd (ASX: NST) have settled higher this week after drifting to 52-week lows of $6.76 on 19 July.
The gold price and Northern Star share a tight relationship in directional movement, as seen on the chart below, displaying both instruments since November 2020.
Image source: Getty Images
What's in store for Northern Star shares?
The gold mining giant recently posted its Q4 FY22 earnings and results came in line with expectations.
It sold a total of 1,561 thousand ounces (koz) of gold at an all-in sustaining cost (ASIC) of $1,633/oz, within guided ranges.
Northern Star also provided FY23 guidance in its report. It forecasts gold sales of 1,560-1,680koz gold to be sold on an ASIC of A$1,630-1,690/oz.
Meanwhile, the downward slide in gold doesn't appear to have impacted the outlook from brokers.
Exactly 100% of analysts covering the company rate it either a buy or strong buy right now, according to Refinitiv Eikon data.
The consensus price target from this extensive list is $10.94, suggesting there is more upside to come if the analysts are correct.
Northern Star has a debt to asset ratio of 5.5% and is expected to increase its capital expenditures in FY23.
It also generated an above-average return on invested capital (ROIC) last half of 19.7% and printed $152 million in company-reported free cash flow. Investors realise a 1.8% yield on this.
Aside from that, Northern Star shares trade at 6.4 times trailing price-to-earnings ratio (P/E) and a 15.7% earnings yield, whilst leaving shareholders a 2.7% trailing dividend yield.
Even still, the market has punished Northern Star these past 12 months. It is now down 25% in that time, or 22% this year to date.
