It's a sea of red across the S&P/ASX 200 (INDEXASX: XJO) on Friday morning with the index plunging 1.2% after Wall Street fell steeply overnight and suffered its worst one-day slide since July. At the close the Dow Jones and the S&P 500 had lost 1.5% and 1.6% respectively as investors became increasingly nervous over tensions with Russia.
Bucking the down trend on the local market today however are gold stocks. In fact all sectors are lower except for the gold sector with heavyweight Newcrest Mining Limited (ASX: NCM) up 2% to $10.53.
Newcrest isn't the only gold stock enjoying gains today. Medusa Mining Limited (ASX: MML), Resolute Mining Limited (ASX: RRL) and Beadell Resources Ltd (ASX: BDR) are all rallying, having gained 9.2%, 5.7% and 4.2% respectively by late morning trade.
Upside potential arises from a relatively low gold price.
Gold is currently buying around US$1,227 an ounce which is close to its one-year low of US$1,188 per ounce. With the precious metal having been as high as US$1,382 in the past year and having touched a record high of US$1,900 in the past five years, there would appear plenty of upside to its recent price range.
Volatility is certainly creeping back into global stock markets with many investors concerned that equity, bond and property markets are overheating. This scenario could set the stage for gold stocks to rally further, so investors looking for momentum or a hedge against declining markets could be well served by increasing their exposure to both physical gold and gold stocks.
