Unfortunately for their shareholders, Australia's leading gold producers have once again dropped sharply as investors rotate out of safe haven assets.
In morning trade the S&P/ASX All Ords Gold (Index: ^AXJO) (ASX: XJO) has fallen around 4%, bringing its decline in the last five trading sessions to a whopping 14%.
Among the worst performers today have been the Newcrest Mining Limited (ASX: NCM) share price, the Northern Star Resources Ltd (ASX: NST) share price, and the Alacer Gold Corp – CDI (ASX: AQG) share price. At the time of writing each of these miners is down at least 5%.
Not far behind them are Resolute Mining Limited (ASX: RSG), Evolution Mining Ltd (ASX: EVN), and Regis Resources Limited (ASX: RRL).
Why have they fallen?
I believe many investors had expected the French election and rising tensions in North Korea to cause the share market to tumble and the gold price to rally.
But with tensions easing in North Korea and the French election likely to be won by Independent candidate Emmanuel Macron and not far-right politician Marine Le Pen, the gold price looks more likely to fall than climb higher now in my opinion.
What's next?
If the French election is won by Macron and conflict is avoided in North Korea, I believe the share market will continue to climb higher and the gold price will start to sink lower.
Especially with rates rising in the United States. As rates rise, bond yields widen, reducing the appeal of holding the precious metal.
So for now I would suggest investors avoid the gold miners and focus on the great number of opportunities available to them elsewhere in the market.
