After Wednesday's falls on the ASX in response to a sell-off in US stocks, equity markets globally look to have regained their composure. Overnight the Dow Jones rallied 0.5%, recovering much of its previous day's losses and putting the blue-chip index back within 15 points of the 17,000 mark. While the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has failed to gain much ground on Thursday, it is holding steady.
Meanwhile gold stocks are surging
By lunchtime Thursday, six of the top ten gainers in the S&P/ASX 200 Index were gold producers. Leading the charge higher were EVOLUTION FPO (ASX: EVN), Northern Star Resources Ltd (ASX: NST), Beadell Resources Ltd (ASX: BDR) and Resolute Resources Limited (ASX: RRL) which all added between 4% and 6%.
While today's gains are good, more importantly, over the last month these four gold producers have all outperformed the index. In the case of Regis and Northern Star, shareholders in these two firms have outperformed by 28% and 36% respectively!
With the gold price now up around 10% for the calendar year and many equity investors concerned that the market is overdue for a correction, there is plenty of impetus for the precious metal to find buying support as investors hedge against a possible rise in volatility.
Another factor supporting shares of leading gold producers is the potential for merger and acquisition activity. Speculation that graphite and vanadium miner Syrah Resources Ltd (ASX: SYR) has received a takeover approach is a reminder that the mid-tier resources space could be ripe for consolidation.
