Here's why the Northern Star (ASX:NST) share price is having a good start to the week

Northern Star Resources' shares book additional gains today

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The Northern Star Resources Ltd (ASX: NST) share price has leapt into the green since trade commenced this week and now trades at $8.92 apiece.

Northern Star shares have been crawling higher these past few days after hitting a low of $8.26 last week, but they have still marched lower from $10 back in July.

Read on for more details.

Why is the Northern Star share price gaining today?

Whilst there's been no market sensitive information for the gold mining company, it's worth noting that the price of gold has popped higher since we started the month.

After trending downwards lately, the price of gold bottomed out at a low of US$1,723/t.oz on 30 September, surging to US$1,761/t.oz on the same day.

This US$38 per troy ounce intraday gain has certainly got investors' attention and has pushed the ASX gold basket higher over these past few days.

And it's come up again since this point, now trading at US$1,759/t.oz, at its February and April 2021 levels.

Northern Star is an ASX resources share that is in a unique position, in that it is in the business of mining and processing gold deposits.

As such, it must accept the spot and/or forward price of gold in the commodity markets, and is considered a price taker.

This means its share price can and does fluctuate with the volatility in the underlying commodity markets. In Northern Star's case, the fluctuations in the price of the precious metal.

In light of the relationship between Northern Star's share price and the price of gold, it starts to make sense why it is off to a good start this week.

However, it has a ways to go to reverse its recent performance, as the Northern Star Resources share price has slumped 8.5% into the red this past month.

Northern Star Resources share price snapshot

The Northern Star Resources share price has struggled this year to date and has missed its benchmarks completely.

It now trades 30% in the red since January 1, extending its gain over the past year to 35%. This is well behind the S&P/ASX 200 index (ASX: XJO)'s return of around 25% in this time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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