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Here’s what’s happening with these gold stocks.
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Major gold stocks Evolution Mining Ltd (ASX: EVN) and Newmont Corp (ASX: NEM) are sliding today despite surging gold prices.
The gold price held above US$5,300 on Monday, paring earlier gains after spiking past US$5,419. At the time of writing on Tuesday morning, the gold price has climbed another 0.58% for the day to US$5,353. This is close to the metals’ all-time high of US$5,419 recorded in late January.
The safe haven asset is now 8% higher over the past month and 84.8% higher over the past 12 months.
The uplift came after a dramatic “buy the dip” rally in US stocks drained the metal’s safe-haven momentum, according to Trading Economics.
But despite the latest rally, Evolution Mining and Newmont shares are travelling in the other direction. Here’s why.
Image source: Getty Images
Newmont is the world’s largest gold miner, and Evolution Mining is one of Australia’s largest listed gold miners. The two mining giants are widely regarded as dominant players in the gold sector.
In Tuesday lunchtime trade, the Evolution Mining share price is down 3.34% to $17.08 a piece. For the year to date, the Aussie gold miner’s share price has climbed 35% and it is currently 178.91% above where it was this time last year.
At the time of writing, the Newmont share price is also trading in the red. The shares have tumbled 3.43% to $180.80 a piece. This means the shares are now 19.64% higher year to date and 165.54% higher than 12 months ago.
There hasn’t been any price-sensitive news out of either of the gold mining companies recently. This suggests today’s slump means the gold price rise was already priced into the stock.
Gold stocks often move ahead of the official gold prices if investors or analysts anticipate higher prices in the near future.
At the same time, the gold price is quoted in US dollars. While ASX gold miners sell their gold in US dollars, they report earnings in Australian dollars. Given that the US dollar is currently weaker against the Australian dollar, a shift in the gold price might not have a significant effect on ASX stock prices.
In other words, even if gold rises globally, the share price of ASX gold miners might not rise if the Australian dollar is also rising.
Analysts are very mixed on the outlook for Evolution Mining shares this year. TradingView data shows that eight out of 20 analysts have a hold rating, five have a buy or strong buy rating, and another seven have a sell or strong sell rating.
The average target price is $14.05, which implies an 18% downside at the time of writing.
Analysts are much more bullish on Newmont’s outlook. TradingView data shows that 20 out of 24 analysts have a buy or strong buy rating on the stock. The average target price is $197.67, which implies a 9.1% upside at the time of writing.
Motley Fool contributor Samantha Menzies has no position 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 Scott Phillips.
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