S&P/ASX 200 Index (ASX: XJO) gold stocks are on a tear today.
In late morning trade on Friday, the ASX 200 is up a welcome 0.6%.
Here's how these top ASX 200 gold stocks are tracking at this same time:
- Northern Star Resources Ltd (ASX: NST) shares are up 4.3%
- Newmont Corp (ASX: NEM) shares are up 4.0%
- Ramelius Resources Ltd(ASX: RMS) shares are up 5.5%
- Gold Road Resources Ltd (ASX: GOR) shares are up 5.5%
- Evolution Mining Ltd (ASX: EVN) shares are up 6.2%
- Perseus Mining Ltd (ASX: PRU) shares are up 6.6%
Turning to the broader basket of Aussie gold miners, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold stocks outside of the ASX 200 – is up 5.1%.
Today's strong outperformance comes as the gold price just smashed yet another new record high.
ASX 200 gold stocks outshine as bullion hits new records
The gold price leapt 1.9% overnight to a fresh all-time high of US$2,559.67 per ounce.
To give you an idea of the tailwinds ASX 200 gold stocks like Northern Star and Evolution Mining have been enjoying of late, gold kicked off 2024 trading for US$2,059 per ounce.
And it was only back on 5 October that the yellow metal was trading for a mere US$1,820 per ounce.
As you'd expect, that made early October an excellent time to buy Aussie gold producers.
What's driving gold prices higher?
Bullion and most ASX 200 gold stocks have been in the sweet spot this year for three primary reasons.
First, gold has enjoyed increased demand from its classic haven status. With plenty of economic and political uncertainty in the world, gold is often considered a relatively safe means to store your wealth.
Second, record central bank gold purchases over the past year have added to that demand. That includes some central banks who look to be trying to build a wealth buffer not reliant on the US dollar.
The third factor, and one that looks more directly related to the overnight leap in the gold price and today's strong run for ASX 200 gold stocks, is that global interest rates are finally coming down.
Bullion, which pays no interest itself, tends to perform better in low and falling interest rate environments.
Yesterday the European Central Bank (ECB) cut the Eurozone's official interest rate for the second time this year. With Europe's economy slowing and inflation seemingly in check, the ECB cut rates by 0.25% to now stand at 3.50%.
And even bigger driver for the gold price and the outperformance of ASX 200 gold stocks is next week's rate decision by the US Federal Reserve. Markets are leaning towards a 0.25% cut from the world's most influential central bank, with some analysts holding out for a 0.50% cut.
Either way, a Fed interest rate cut appears all but assured next Wednesday (overnight Aussie time).
Commenting on the Fed's rate cut outlook and gold prices, Alex Ebkarian, chief operating officer at Allegiance Gold said (quoted by Bloomberg):
We are headed towards a lower interest rate environment, so gold is becoming a lot more attractive … I think we could potentially have a lot more frequent cuts as opposed to a bigger magnitude.
Should the Fed surprise to the upside with a 0.50% interest rate cut next week, ASX 200 gold stocks could enjoy another run higher.
