Northern Star leads sell-off in ASX gold stocks
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The news: Northern Star Resources led a sell-off in gold stocks on the ASX, as a resurgent US dollar weighed on the price of spot gold.
The numbers: Northern Star (-7.1%), West African Resources (-3.6%), Ramelius Resources (-3.1%), Evolution Mining (-3.1%), Emerald Resources (-3%), Westgold Resources (-3%) and Newmont Corporation (-2.9%) made up seven of the worst 10 performing ASX 200 companies by 2:25pm AEDT.
The materials sector edged up 0.27% as De Grey Mining (27.1%) and Gold Road Resource (9.7%) bucked the trend.
Spot gold fell 0.64% to USD2,626.24 ($4,040.15) per ounce, according to Bloomberg data.
The context: Spot gold lowered on renewed demand for the US dollar, following support by US President-elect Donald Trump who threatened BRICS member countries with 100% tariffs if they were to create a new currency or supported another currency that could replace the greenback.
Gold miners Northern Star and De Grey were the best and worst performing ASX 200 stocks respectively, after Northern Star agreed to buy De Grey for $5 billion. Gold Road has around a 17% shareholding in De Grey.
RBC Capital Markets analyst Alex Barkley said the deal was "overall a positive outcome" for De Grey and "near-term neutral" for Northern Star, with upside as De Grey's flagship Hemi project progresses.
What they said: "We have long argued the takeover appeal of [De Grey], and it has likely been scrutinised by multiple global major gold companies," said Barkley.
"Due to perceived project risks, the timing of this offer could give [Northern Star] a more value accretive entry point."
