The Northern Star Resources Ltd (ASX: NST) share price was a poor performer on Wednesday.
The gold minerâs 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. Thatâs because gold doesnât 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 companyâs shares. This implies potential upside of 40% for investors over the next 12 months.
The post Northern Star share price slides 3%: Is it time to load up? appeared first on The Motley Fool Australia.
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More reading
- 5 things to watch on the ASX 200 on Wednesday
- The Northern Star share price has dumped 8% in a month. So what’s the dividend yield right now?
- 5 things to watch on the ASX 200 on Monday
- Do ASX 200 gold shares pay regular dividends?
- 5 things to watch on the ASX 200 on Wednesday
Motley Fool contributor James Mickleboro 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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