Gold stocks feel the heat following sharp fall in spot prices

Listed gold miners are coming under intense pressure, after spot prices experienced their sharpest fall in 18 months.

Molten gold is poured into moulds at Norton Gold Fields Paddington operations near Kalgoorlie. (Carla Gottgens/Bloomberg)

Australia’s gold miners are in the firing line on the ASX today after spot gold marked its heaviest one-day retreat in almost 18 months overnight.

The price of the precious metal skidded 3.3 per cent to a post-Brexit vote trough of $US1,266.8 by the end of US trade as worries about a pullback in central bank stimulus forced bond yields higher.

Gold is a non-yielding asset, meaning the prospect of higher rates raises the opportunity cost of holding the precious metal.

It has recovered above $US1,270 during Asian trade, but remains well below where it stood during local trade yesterday and its weakness is pressuring local gold stocks.

Sector behemoth Newcrest (NCM) was off 5.5 per cent at $21.205 at 2pm (AEDT), while smaller rivals Evolution (EVN), St Barbara (SBM) and Regis Resources (RRL) plunged 8.3 per cent, 7.8 per cent and 6.3 per cent, respectively.

This compares unfavourably to a broader market fall of 0.5 per cent.

IG chief market strategist Chris Weston said the US closing mark would prove a key level for the precious metal moving forward, with any move below this position potentially forcing gold quickly back to the $US1,200 mark.

“As soon as (gold) broke below the $US1,310 to $US1,308 area the sellers aggressively moved in. The subsequent break below the September 1 low of $US1,302 took out stop losses, in turn it caused algorithms and other systematic funds to jump on board,” he said.

“A break of $US1,266 would now be key for a move back into $US1,200.”