Gold prices fell sharply last week amid a strengthening U.S. dollar. And according to Citigroup (C), gold prices could continue to retreat in the near term. So, we think it could be wise now to short gold mining stocks NovaGold Resources (NG), Equinox Gold (NYSE:EQX), and Osisko Royalties (OR). Let’s discuss.Gold is considered a safe-haven asset, but gold prices plunged last week amid high inflation and a rebound in the U.S. dollar index. According to a CNBC report, inflation notched a new 30-year high recently. Moreover, a hawkish Bank of Canada announcement and mixed economic data contributed to the yellow metal’s price decline.
Because the Federal Reserve’s asset tapering activity is expected to begin this month, it could lead to a further decline in gold prices. According to Citigroup Inc. (NYSE:C), ‘short gold’ is an appropriate pain trade over the medium-term. In addition to C, several other Wall Street analysts have turned negative on gold’s price performance this week.
Given the bearish market sentiment around gold, we think it could be wise to short gold mining stocks NovaGold Resources Inc. (NG), Equinox Gold Corp (EQX), and Osisko Gold Royalties Ltd . (NYSE:OR).