Here's why ASX gold shares just had their best month in 2 years

Gold prices rose sharply in February as investors sought out haven assets.

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A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price

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Key points

  • ASX gold shares trounced the index in February
  • Inflation concerns saw investors turn to gold as a hedge
  • Rising geopolitical risks drove gold prices sharply higher as investors sought haven assets

ASX gold shares certainly shone brightly in February.

In fact, you've got to go back to April 2020 to see ASX gold shares deliver stronger monthly gains.

And that, as you'll recall, was the month when most all stocks came roaring back following the previous month's pandemic-fuelled panic selling.

How well did ASX gold shares perform in February?

The best answer to that question lies in the S&P/ASX All Ordinaries Gold Index (ASX: XGD).

From the closing bell on 31 January through to the closing bell on 28 February, the ASX gold index gained a whopping 18.2%.

To put that into some context, the All Ordinaries Index (ASX: XAO) was only up 0.8% in that same period.

What drove the outperformance?

Investors began snapping up ASX gold shares over the course of the month as the price of the bullion they explore for and mine from the earth surged.

The yellow metal kicked off February trading at US$1,801 (AU$2,467) per troy ounce. Gold finished the month at US$1,914 per ounce, up 6.3%, according to data from Bloomberg.

Gold prices had already been trending upwards for most of 2022, as inflation fears began to tick up around the globe. Gold is classically seen as a hedge in times of fast rising costs.

But February saw gold prices really lift as Russian forces began to mass around Ukraine. When Russia invaded its neighbour towards the end of the month, investors seeking haven assets sent the price of gold higher.

Some leading ASX gold shares

Here's how some leading Aussie gold producers performed in February.

S&P/ASX 200 Index (ASX: XJO) mining giant Newcrest Mining Ltd (ASX: NCM) saw its shares surge 19.1%.

Fellow ASX 200 gold miner, Evolution Mining Ltd (ASX:EVN), also boomed. The Evolution share price gained 22% for the month.

Sticking with the big players, the Northern Star Resources Ltd (ASX: NST) share price rocketed an impressive 24.4% in February.

Moving to the smaller end of the mining spectrum, with a market cap of $228 million, Dacian Gold Ltd (ASX: DCN) shares lifted 16.7%.

And topping the best returns for ASX gold shares in February is Alkane Resources Limited (ASX: ALK). The gold miner saw its share price leap 26.8% last month.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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