Investors in some of the biggest ASX gold shares have been nursing some hefty losses of late.
While the S&P/ASX 200 Index (ASX: XJO) has dropped 8.1% so far in 2022, leading gold miner Newcrest Mining Ltd (ASX: NCM) is down 12.3%.
Meanwhile, rival ASX gold share Northern Star Resources Ltd (ASX: NST) has dropped 11.7% while Evolution Mining Ltd (ASX: EVN) is down 15% since the opening bell on 4 January.
That's the recent price action.
And it comes as the World Gold Council reports that global gold demand hit 2-year highs in 2021.
Global gold demand ramps back up
According to the World Gold Council's latest Gold Demand Trends Report, gold demand in 2021 ramped back up following a big hit from the pandemic in 2020.
Annual demand for gold (excluding OTC markets) came in at 4,021 tonnes.
The fourth quarter was particularly strong with demand reaching 1,147 tonnes. That's a 50% year-on-year increase and its highest quarterly level since the second quarter of 2019.
An increase in safe haven demand from spooked retail investors saw gold bar and coin demand increase by 31% to 1,180 tonnes. That's the highest level reported since 2013.
Gold demand from the jewellery sector of 2,124 tonnes was back at 2019's pre-COVID levels.
And the world's central banks added a combined 463 tonnes to their bullion holdings, up 82% year-on-year. According to the report, that's the 12th year running that central banks were net purchasers of gold.
The World Gold Council said that tailwinds for gold from increasing interest rates could be offset by the continuing demand for haven assets.
Commenting on the results, Louise Street, senior analyst EMEA at the World Gold Council, said:
Gold's performance this year truly underscored the value of its unique dual nature and the diverse demand drivers. On the investment side, the tug of war between persistent inflation and rising rates created a mixed picture for demand. Increasing rates fuelled a risk-on appetite among some investors, reflected in ETF outflows. On the other hand, a search for safe haven assets led to a rise in gold bar and coin purchases, buoyed by central bank buying.
Street expects "similar dynamics to influence gold's performance in 2022 with demand drivers fluctuating according to the relative dominance of key economic variables".
How have these ASX gold shares performed longer-term?
Using the ASX 200 as our benchmark, the index has gained 4.5% over the past 12 months and is up 23.8% over the past 5 years.
So how do our 3 ASX gold shares named above stack up?
The Newcrest share price is down 16.5% over the past year and down 4.2% in 5 years.
Evolution shares are down 27.6% since this time last year but have posted a strong 55.8% gain over the last 5 years.
The Northern Star share price is down 35.9% over the full year but up a very healthy 108.4% in 5 years.
There you have it. Longer-term 2 out of 3 of these ASX gold shares have trounced the index's returns.
