The Australian sharemarket traded slightly lower on Thursday morning, despite a rally on Wall Street overnight, as investors digest the implications of Donald Trump’s US election win for local companies. The S&P/ASX 200 Index edged down 10.2 points, or 0.1 per cent, to 8189.3 points as of 11.23am AEDT, with six of the 11 industry sectors in the red. Energy, IT and industrial stocks were the best performers on the morning after the landslide election, while the real estate sector slumped.
However, one sector that took a significant hit was gold, with ASX-listed gold shares plunging on Thursday. This downturn appears to be fueled by a combination of factors, including a decline in gold prices and a strengthening US dollar.
Gold Price Volatility Impacts ASX Gold Shares
The gold price has been volatile in recent days, with a sharp decline on Thursday morning. Earlier in the week, gold futures contracts rose substantially in value overnight, prompting some analysts to predict a good day for ASX gold shares. However, by the time trading commenced on Thursday morning, those gains had been reversed.
According to CNBC, December gold futures contracts are now down to US$2,669.60 an ounce, and the spot price has also fallen to US$2,662.20. This move can be attributed to both a decline in the gold price itself and a rise in the value of the US dollar.
Gold is always priced in US dollars in international markets. As such, the price of gold usually falls in other markets like Australia when the value of the greenback rises.
US Election Results Trigger Broad Market Volatility
Beyond the gold market, there is a lot of volatility happening across all asset classes. The price of Bitcoin (CRYPTO: BTC) and other cryptocurrencies surged in the wake of the American elections. Bonds and the stock markets have also responded with big moves.
It appears there is a lot of money moving around and in between asset classes today. Gold (and gold stocks by extension) is getting the raw end of the deal for now, but given what we've seen over just the past 24 hours, who knows what will happen next.
The Impact on Individual Gold Stocks
The decline in gold prices has had a noticeable impact on individual ASX gold stocks. For example, Newmont Corporation (ASX: NEM) shares are currently down 3.43% at $66.98. Northern Star Resources Ltd (ASX: NST) stock is faring even worse, with shares tanking 6.08% to $16.54.
Other ASX 200 gold miners, including Gold Road Resources Ltd (ASX: GOR), Resolute Mining Ltd (ASX: RSG), Emerald Resources N.L. (ASX: EMR), and Westgold Resources Ltd (ASX: WGX), have all lost more than 7% on Thursday.
Uncertainty Looms
The current market volatility, coupled with the recent US election results, is creating a challenging environment for investors. It remains to be seen how long the downturn in gold prices will last and what impact it will have on the long-term prospects of ASX gold shares. Investors will need to carefully monitor market developments and make informed decisions about their investment portfolios in light of this uncertainty.
A Time for Careful Consideration
While the recent decline in gold prices may be concerning for investors, it's important to remember that gold has traditionally been seen as a safe-haven asset. The current market volatility might be a temporary blip, and gold could rebound in the future. Investors with a long-term investment horizon may want to consider this perspective.
However, it is crucial for investors to carefully consider their investment goals and risk tolerance before making any investment decisions.
Disclaimer
This article is for informational purposes only and should not be considered as financial advice. It is essential to consult with a qualified financial advisor before making any investment decisions.
