Although the benchmark S&P/ASX 200 has dropped lower today, one area of the market is certainly booming.
The S&P/ASX All Ords Gold (Index: ^AXGD) (ASX: XGD) has jumped 2.8% this morning as investors pile into the gold miners again.
The Newcrest Mining Limited (ASX: NCM) share price, the Evolution Mining Ltd (ASX: EVN) share price, and the Saracen Mineral Holdings Limited (ASX: SAR) share price are amongst the biggest movers in the sector, each rising by at least 3%.
Elsewhere Resolute Mining Limited (ASX: RSG), Perseus Mining Limited (ASX: PRU), St Barbara Ltd (ASX: SBM), and Northern Star Resources Ltd (ASX: NST) have also made notably stronger-than-normal gains today.
Why have they jumped?
In the last three weeks the gold price has been on a steep decline, falling around 6.1% from the year-to-date high of US$1,295 an ounce it made in April.
But overnight the precious metal's losing streak came to an end and it bounced off recent lows to US$1,226 an ounce as global markets retreated.
Should you invest?
Whilst I wouldn't disagree with the opinion that a little bit of exposure to gold is a good thing, I do think this is perhaps the wrong time to add this exposure.
With interest rates in the United States expected to rise at least twice more this year, I believe widening bond yields will place significant pressure on the gold price.
This in turn is likely to put pressure on the share prices of Australia's gold miners. As a result, I would suggest investors stay clear of the gold miners for the time being.
