After being on a glittering run in recent weeks, the shine has well and truly come off ASX gold shares this week.
For example, over the last two trading sessions, the S&P/ASX All Ords Gold index has lost 4% of its value.
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What's going on with ASX gold shares?
There have been a few catalysts for the weakness in the gold sector this week.
Firstly, it is worth acknowledging that ASX gold shares have been on fire this year. So much so, even after this week's pullback, the S&P/ASX All Ords Gold index is up over 26% year to date. That's many times greater than the return of the ASX 200 index.
In light of this, there's potentially been a bit of profit taking going on recently, especially after the gold price pulled back in recent days amid concerns that interest rate hikes may not be over after all.
While rate hikes can cause economic instability, which is good for a safe haven asset like gold, they also boost the appeal of risk-free treasury yields. This can ultimately reduce the appeal of the precious metal.
What else?
In addition to the above, there has been some company-specific news this week that has led to a couple of ASX gold shares taking larger than average tumbles.
For example, St Barbara Ltd (ASX: SBM) shares have been sold off this week after returning from a suspension. Investors don't appear to like its plan to sell its Leonora assets to Genesis Minerals Ltd (ASX: GMD). This is instead of merging their operations as previously planned.
Genesis believes the acquisition will position it as a gold industry leader with a dominant position in Western Australia's world-class Leonora District. St Barbara will be left with its Atlantic and Simberi operations.
Elsewhere, the Regis Resources Ltd (ASX: RRL) share price crashed down to earth on Monday after the gold miner released its quarterly update.
Regis revealed that it delivered gold production of 103,728 ounces during the quarter, which was well short of expectations. This led to Regis Resources revising its full-year production guidance lower.
All in all, a tough start to the week for ASX gold shares. But I'm sure investors that have been holding them since the start of the year won't be too disappointed!
