Why are ASX 200 gold shares like Newcrest being thumped on Thursday?

The S&P/ASX 200 Index (ASX: XJO) is on fire this Thursday. So far today, the ASX 200 has added a healthy 1.02%, pulling the Index back above 7,100 points. The ASX 200 has now added a rather massive 2.4% over this week alone so far (and it’s only Thursday). But not all ASX 200 shares are basking in these gains today. So let’s have a look at the ASX 200’s gold shares. 

During the massive share market slump that we have seen this month, ASX 200 gold shares were one of the market’s few bright spots. To illustrate, the Newcrest Mining Ltd (ASX: NCM) share price rose a whopping 14.45% between 8 March and 29 March:

Some other ASX 200 gold shares did even better than that.

But today, those same gold shares are one of the market’s few weak spots.

ASX 200 gold shares get shunned by investors

Take Newcrest, the ASX 200’s largest gold miner. It’s currently nursing a 1.2% loss, underperforming the broader market by more than 2%.

Silver Lake Resources Ltd (ASX: SLR) shares are down 1.3% to $1.13 each. De Grey Mining Limited (ASX: DEG) shares have slid by almost 2% to $1.49 a share, while Gold Road Resources Ltd (ASX: GOR) is one of the worst-performing shares on the entire ASX 200 at present, enduring a 3.58% loss to $1.62 a share.

So what’s going on here?

Well, it seems the problem is stemming from the gold price itself. Gold miners like Newcrest, De Grey and Silver Lake are primarily valued on the gold that they own and can sell. If that gold is less valuable, then so too are these companies.

As my Fool colleague pointed out this morning, gold has indeed had a rough time of it lately. The precious metal fell by 0.5% in overnight trading down to around US$1,980 per ounce. It’s fallen even further over the course of today’s session and is now back down to around US$1,960 per ounce.

It was only last week that gold looked like it would vault over the psychologically important US$2,000 per ounce mark, so this is a rather dramatic pullback.

Gold traditionally functions as a safe haven asset. That’s probably why we saw the yellow metal enthusiastically embraced over the past few weeks as global markets tanked. But now that investors seem to have rediscovered their love for shares, gold is conversely suffering.

We see similar trends play out all the time in this space, so today’s developments are not much of a surprise. But even so, most ASX 200 gold shares remain far higher than where they were at the start of the month.

 

The post Why are ASX 200 gold shares like Newcrest being thumped on Thursday? appeared first on The Motley Fool Australia.

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More reading

• Why Jervois Global, Mincor, Newcrest, and Santos shares are dropping today
• Here are the top 10 ASX 200 shares today
• Go for gold: Advisors name 2 ASX 200 shares to pounce on
• 5 things to watch on the ASX 200 on Monday
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor Sebastian Bowen has positions in Newcrest Mining. 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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