What Happened to Aussie Gold Stocks?
Aussie gold stocks had a rough day today. Four out of the five top decliners in the ASX 200 were gold stocks. Northern Star Resources [ASX:NST] had the biggest decline, falling around 5.5%. Newcrest Mining [ASX:NCM], Australia’s largest gold producer, fell around 3.4%.
Why Did This Happen to Aussie Gold Stocks?
Aussie gold stocks are influenced by the gold price denominated in Aussie dollars. In US trade overnight, the US dollar gold price fell and the Aussie dollar rose against the greenback. This created a double whammy for the Aussie dollar gold price, and it fell around 1.5%.
Today, that translated into relatively sharp falls for the Aussie listed gold miners. In addition, some gold companies released their reports for the March quarter. For example, NST reported higher than expected costs and slightly lower than expected production, hence its 5% plus share price decline.
What Now for Gold Stocks?
It’s worth putting these falls into context though. The Aussie dollar gold price has had a strong run so far this year, thanks largely to a weak Aussie dollar against the greenback. As a result, many Aussie listed gold companies have performed very well.
In general, these stock prices are very volatile so today’s price action isn’t all that unusual. In fact, given the price falls across the sector and the positive outlook for the Aussie dollar gold price, it may be worth picking up a few shares if this selloff continues.
for The Daily Reckoning