The Northern Star Resources Ltd (ASX: NST) share price has tumbled in the past month.
Since the start of May, the gold miner's shares have dropped around 10%, making the company one of the worst performers across the sector.
By comparison, the share price of fellow miner Newcrest Mining Ltd (ASX: NCM) declined by 7% across the same timeframe.
At the time of writing, Northern Star shares are recovering some of their losses, up 2.87% to $8.97.
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What's happened to the Northern Star share price?
The deteriorating price of gold has weakened investor sentiment, sparking a selloff of Northern Star shares.
The precious yellow metal has failed to keep up in recent times despite the turmoil impacting global markets. During times of uncertainty and volatility, gold is traditionally seen as a safe haven for investors.
However, the spot price of gold has travelled lower to trade under US$1,860 per ounce. It was only for a brief moment in early May that the gold price neared the US$1,900 mark.
China is a key market for gold purchases, particularly for use in jewellery.
Previously, the Asian giant was under tough COVID-19 restrictions which led to stores being closed in major districts.
This severely weakened demand for gold as consumers' spending habits were disrupted.
Low demand in key markets such as China or India can drag down the price of gold.
Jewellery accounts for the largest slice of global gold demand at around 50%. This is followed by central bank reserves at 25%, individuals at 15%, and industrial uses at 10%.
In addition, with interest rates lifting, this has also driven investors away from the yellow metal.
There is a correlation here as when interest rates are low, it reduces the opportunity cost of holding non-yielding bullion.
On the other hand, when interest rates rise, investors begin to shift from gold to bonds.
What do the brokers think?
A couple of brokers believe the Northern Star share price is currently trading at a bargain price.
Last week, UBS slashed its outlook on Northern Star shares by a marginal 0.8% to $11.70 per share. Based on the current share price, this implies an upside of 31% for investors.
While the broker reduced its assessment on Northern Star, it still sees value in the gold miner.
On the other hand, Credit Suisse raised its outlook on the company's shares by 4.5% to $11.50. Its analysts believe Northern Star shares still have some room to bounce higher.
