What happened to Australian Gold Miner Shares?
Australian gold miner shares fell after the US Federal Reserve´s meeting yesterday.
Resolute Mining Limited [ASX:RSG] lost the most value at 5.48%, at time of writing. Northern Star Resources Ltd [ASX:NST] ST Barbara Ltd [ASX:SBM], Galaxy Resources Ltd [ASX:GXY], Evolution Mining Ltd [ASX:EVN] and Newcrest Mining Ltd [ASX:NCM] were also down by 5.20%, 4.78%, 3.82%, 3.25% and 3.06% respectively.
Why the Share Price Drop?
As predicted, the Fed decided to maintain the interest rates on hold at 1%–1.25%. Yet, even without inflation picking up, the Fed is expected to introduce another rate hike by the end of the year.
The Fed also announced it will be starting to unwind its US$4.5 trillion balance sheet in October. That is, they will be ending the stimulus they started during the 2008 financial crisis. They will be doing so very slowly, at US$10 billion per month.
Following the announcement, the Dow Jones and the S&P went on to reach new highs.
Gold fell after the Fed generated optimism on future rate hikes, as a stronger dollar would mean lower gold prices.
What now for Gold Miners?
The US Fed has a tough job ahead. The Fed has increased their balance sheet by five times since 2008 when it was at around US$900 billion.
With persistent low inflation, salary growth and world debt at record highs we are yet to see if the expected rate hikes will happen.
PS: If you want to find out what are Australia´s top 10 mining stocks right now, click here.
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