Gold miners lose their lustre as price of precious metal drops

Gold miners lose their lustre as price of precious metal drops

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Big US-listed gold miners have shed one-fifth of their market value this year as a strengthening dollar and a rise in bond yields from 2020 lows dented the price of the precious metal.

The New York Stock Exchange Gold Bugs index has tumbled 20 per cent since the end of last year to the lowest level since April 2020, badly lagging behind the 11 per cent gain for the broad MSCI All-World share market barometer.

Gold has fallen 14 per cent since it hit a record of more than $2,000 a troy ounce last August.

The metal’s appeal has been dulled by strength of the dollar, which makes the metal more expensive to international buyers, and elevated bond yields compared with this time last year. Gold, unlike bonds, offers no income streams. The rally in global stock markets has also darkened its allure.

“People are afraid of higher rates,” said Robert Minter, director of investment strategy at Aberdeen Standard Investments. “This is ‘sell everything, throw the baby out with the bathwater’. Gold is going to be a constant opportunity for us any time it drops like this.”

Lower gold prices have