Major Australian gold mining stocks faced a decline on Wednesday, mirroring the retreat in gold prices from record highs following robust U.S. inflation data. The retreat impacted key players in the sector, with notable decreases observed in Northern Star Resources Ltd, Evolution Mining Ltd, and Genesis Minerals Ltd.
Northern Star Resources Ltd (ASX:NST), the largest listed gold miner in Australia, saw a 1.4% drop in its shares.
- Sydney shares (ASX:NEM) of U.S. gold miner Newmont Goldcorp Corp (NYSE:NEM) experienced a 2.6% decline.
- Evolution Mining Ltd (ASX:EVN) recorded a loss of 2.1%.
- Genesis Minerals Ltd (ASX:GMD) faced a 2.4% decrease.
While the broader Australian stock market, represented by the ASX 200, rose by 0.3%, gold miners lagged behind due to the retreat in gold prices. Spot gold and gold futures both slid over 2% from their respective record highs.
The decline in gold prices was influenced by concerns about higher-for-longer U.S. interest rates, driven by an unexpectedly high consumer price index inflation reading for February. The subsequent rise in the dollar and Treasury yields added pressure on gold prices.
The anticipation of higher interest rates creates a higher opportunity cost for investing in gold, reducing its attractiveness. This dynamic, coupled with smaller profit margins for gold miners due to weaker gold prices, contributed to the pullback in gold mining stocks.
Despite this setback, gold mining stocks had seen substantial gains in the preceding two weeks, aligning with the surge in gold prices. The market is closely monitoring the Federal Reserve’s stance on interest rates, as it may impact the trajectory of gold prices and mining stocks in the near term.
