It's been a tough run for S&P/ASX 200 Index (ASX: XJO) gold stocks since the price of the yellow metal hit record highs at the end of January.
As you may recall, on 28 January, the gold price created a stir by setting a new all-time high just north of US$5,420 per ounce. At the time, that saw the gold price up around 93% over the previous 12 months.
But since that high water mark, the gold price and ASX 200 gold stocks have come under heavy pressure.
On Friday, gold was fetching US$3,994 per ounce. That's down more than 26% since the end of January.
As for the Aussie gold miners, since market close on 29 January, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) has tumbled 29%, materially underperforming the 1.8% losses posted by the ASX 200 over this same period.
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Why is the gold price in free fall?
After its meteoric rise in 2025, the gold price has tumbled back to earth, in part due to expectations of higher interest rates in many major economies.
That's particularly relevant for the United States, with the US Federal Reserve now increasingly expected to lift interest rates rather than cut them to combat resurgent inflation in the world's top economy.
Gold, which pays no yield itself, tends to perform better in low or falling rate environments.
Commenting on the outlook for the gold price, and by connection ASX 200 gold stocks, Commonwealth Bank of Australia (ASX: CBA) head of commodities Vivek Dhar said (quoted by the Australian Financial Review):
A rebound in gold prices is now likely contingent on US inflation and labour market data weakening further. Our view that the Fed needs to raise the Fed Funds rate by 75 basis points from December, which the market is under-pricing, [and] suggests further headwinds to gold futures.
Five ASX 200 gold stocks to weather the storm
A number of leading fund managers said they've reduced their holdings in smaller ASX gold explorers in favour of the larger gold producers.
"The gold price has taken an absolute beating. Now is not the time to be going for more speculative gold names, or those that are relatively high cost," Argonaut's David Franklyn said (quoted by the AFR).
Franklyn named ASX 200 gold stocks Genesis Minerals Ltd (ASX: GMD), Ramelius Resources Ltd (ASX: RMS), Greatland Resources Ltd (ASX: GGP), and Capricorn Metals Ltd (ASX: CMM) as miners that he's still optimistic on.
And while his fund has reduced its overall exposure to the gold sector, Acorn Capital portfolio manager Rick Squire expects Bellevue Gold Ltd (ASX: BGL) is well-positioned to outperform. That's partly due to the ASX 200 gold stock's lower reliance on ever more expensive diesel following its renewable energy investments.
According to Squire:
We're looking at companies that have the cash to withstand the dip or, if they are developers, are [at] least fully financed and are in that construction phase. With the gold pullback, there will be a change [in] investor sentiment around what projects are likely to get up and their ability to fund them.
