What: Gold bugs were in their element on Monday with the sector arguably acting as it should – as a store of value with the precious metal gaining ground as investors sold off equities.
By the close of the trading session, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) had fallen 0.9%, meanwhile the S&P/ASX All Ordinaries Gold (Sub Industry) index rallied a massive 3.1% on the back of a near 1% rise in the gold price. Gold is currently trading at a three-month high.
So What: The rally in the gold price sent many gold stocks soaring during Monday’s session. These were some of the stand-out performers:
- Silver Lake Resources Limited. (ASX: SLR) soared 19.4%
- Medusa Mining Limited (ASX: MML) rallied 15.9%
- EVOLUTION FPO (ASX: EVN) lifted 11.5%
- Perseus Mining Limited (ASX: PRU) added 10.7%
- Beadell Resources Ltd (ASX: BDR) gained 9.7%
- Regis Resources Limited (ASX: RRL) jumped 8.1%
- Troy Resources Ltd (ASX: TRY) climbed 5.5%
Now What: Overnight the gold price continued to climb higher, adding a further 0.7% to around US$1,164 an ounce. With the ASX futures pointing towards a soft opening there will be further impetus for gold stocks to head even higher today.
Indeed with the gold price (when expressed in US dollars) still down over the past year, gold bulls might suspect there is plenty more room to run. For Australian gold miners and investors however, of equal importance is the direction of the Australian dollar as this has the potential to improve (or reduce) returns even if the US gold price tracks sideways.
As the ASX flirts with 6,000, some experts are predicting a market crash…
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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.