The Northern Star Resources Ltd (ASX: NST) share price was a poor performer on Wednesday.
The gold miner's shares ended the day 3% to $7.78.
Why did the Northern Star share price drop?
Investors were selling Northern Star and other gold mining shares on Wednesday after the spot gold price pulled back.
According to CNBC, the spot gold price fell 1.55% during overnight trade to US$1,713.6 an ounce. It has continued to edge lower since then and is currently fetching approximately US$1,711 an ounce.
Traders were selling down the gold price following the release of US inflation data. As you might have seen in the news today, US inflation did not cool as many were expecting in August. Instead, it rose slightly month over month despite gasoline prices easing. This has sparked fears that the US Federal Reserve will have to make aggressive rate hikes in order to tame inflation.
This could be bad news for Northern Star and other gold shares. That's because gold doesn't provide a yield and loses its allure with investors when cash and term deposits offer decent yields.
So, with interest rates tipped to rise strongly by the end of the year, the gold price could struggle.
Is this a buying opportunity?
A number of brokers remains positive on the Northern Star share price despite rising interest rates.
One of those is Citi, which currently has a buy rating and $10.90 price target on the company's shares. This implies potential upside of 40% for investors over the next 12 months.
