Five ASX gold stocks to watch as prices firm up

Summary

  • Gold has been hovering around the level of US$1,680/oz for the last six months.
  • Strong performance of the US dollar and better unemployment data from the US labour market are seen as the factors behind gold’s dismal performance.
  • As cases are on the rise in the United States, it is anticipated that investors may channelise their funds from equity to the gold commodity market.

After crossing the US$1,900/oz mark in May 2021, gold prices have been losing sheen. If we look at the chart below, we can see a strong support zone at US$1,680/oz level. Though the prices have been hovering around this level for over a year now, they rebounded this month.

Source: Refinitiv, Analysis: Kalkine Media

Why the dismal performance?

The strong performance of the US dollar and better US jobs data are being considered as the primary factors for the slide in the prices of the yellow metal. Also, there are concerns that the US Fed may start paring back stimulus packages for the pandemic sooner than expected.

Related read: ASX stocks in focus as US jobs data weighs on precious metals

However, this week, gold prices have shown some strength. The current revival could be seen as a reaction to the increase in cases of Delta variant in the United States. There has been a general trend of investors moving their money from equity markets to the gold commodity market with increasing coronavirus cases. 

On that note, let’s have a look at how major gold players have been performing on the ASX in the current price scenario

Data source: ASX website, 12 August 2021

Good read: Koonenberry Gold IPO: How to invest in this public offering

Newcrest Mining Ltd (ASX:NCM)

Australia’s largest gold producer Newcrest Mining has its operations spread in Canada, Papua New Guinea (PNG) and Australia. The company reported a gold production figure of 542koz at an All in Sustaining Cost (AISC) of US$797/oz for the June 2021 quarter.

Copper production stood at 38kt for the reported period. During the March 2021 quarter, the Cadia Gold Mine in New South Wales reported a negative AISC of US$160/oz, which has further dipped to US$377/oz.

NCM is a consistent dividend payer. The Company paid a dividend of AU$0.193 per share during the March 2021 quarter.  

Related read: Who is the largest gold producer in Australia?

Northern Star Resources Ltd (ASX:NST)

Northern Star owns a world-class gold asset portfolio in Australia and North America. Gold production for the June quarter stood at 450,741 ounces. NST reported net gold revenue of AU$914 million from the sales of 444,012 ounces of gold.

Most of the gold production came from the Kalgoorlie, Yandal and Pogo gold projects. The Company’s AISC was AU$1,850/oz for the reported period.

Northern Star pays regular dividends to its shareholders. The last payout was AU$0.095 per share with an annual yield of 3.14%.  The Company has a market cap of AU$10.72 billion as of 12 August 2021.

Related read: Top ten fully franked gold stocks with high dividend yield

OZ Minerals Ltd (ASX:OZL)

The Adelaide-based gold and copper miner owns and operates projects in Australia and Brazil. OZ Minerals’ June production remained at 57,875 ounces while copper production came in at 32,681 tonnes. The AISC for gold production for the reported period was US$1.345/lb.

The Company has upgraded its FY21 guidance to the range of 205,000-228,000 from the previous range of 190,000-215,000.  

The Company has a market cap of AU$7.47 billion and paid a dividend of AU$0.17 in March 2021.

Sandfire Resources Ltd (ASX:SFR)

Sandfire Resources owns and operates a producing gold and copper asset in Australia and major exploration and development projects in Botswana and the US.

Most of the Company’s production comes from the DeGrussa Copper Mine currently. During the June quarter, production was 9,016 ounces of gold and 18,252 tonnes of copper. Sandfire has given production guidance of 30,000-33,000 ounces of gold and 64-68 kt of copper for FY22.

The Company has a market cap of AU$1.22 billion as of 12 August 2021.

Related Read: Three ASX gold stocks to light up your portfolio as gold prices heat up

Evolution Mining Limited (ASX:EVN)

Evolution Mining runs gold projects in Australia and Canada. During the June quarter, the Company’s gold production was 169,146 ounces at an AISC of AU$1,239/oz. In a major event of the last quarter, EVN completed the acquisition of Battle North Gold at Red Lake Operation in Canada.

Evolution Mining has a market cap of AU$7.17 billion as of 12 August 2021. The Company paid a dividend of AU$0.07 per share during the March quarter. The dividend yield stood at 4.04%.

Good read: How to invest in gold stocks in Australia?

Bottom Line

Since the support level of US$1,680/oz has been valid for the last six months, it could be considered as a major support level for the bulls. The long-term view on gold remains positive, and the yellow metal is expected to deliver significant returns on investment.  

Related read: Which are the best gold stocks on the ASX?

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