Gold rally's impact on ASX gold stocks

November 30, 2022 06:31 PM AEDT | By Team Kalkine Media
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  • To curb the rising inflation, central banks worldwide have increased their lending rates.
  • The World Gold Council reported that global central banks bought gold bullion at the fastest rate in the third quarter of 2022.
  • The share price of Northern Star surged by more than 20% compared with prices in October 2022.

Gold is found in small amounts in various regions of the earth. It is a highly stable metal and hence does not react or corrode easily. Australia, the second largest producer of gold in the world, has a well-established gold mining industry.

Gold is a commodity whose price depends on several factors, like demand and supply, the relationship between gold and fiat currencies, inflation, government reserves, import duty, fluctuations in currency, and geopolitical factors.

Global rally in gold prices

The US dollar was already appreciating against other currencies in the second half of 2021 and it was given a rapid push by Russia’s invasion of Ukraine. As a result, other currencies lost value against  the US dollar. A large portion of the gold demand across the globe is met with the help of imports. This strengthens domestic gold prices, causing them to rise.

Inflation leads to a decrease in the value of currency. With the rising inflation, central banks increased their lending rates. The demand for gold also increased, but the supply was still limited. As a result, gold prices were on the rise.

The United States released its consumer price index data recently and the trend showed that consumer prices were lower than in June 2022. The US Fed increased interest rates by 75 bps to achieve its inflation target of 2%. Amidst the geopolitical tensions between Russian and Ukraine, Poland was hit by a missile. Again, gold prices spiked for a short duration.

ASX gold stocks’ recent performance

Data Source: ASX as on 30 November 2022

Australian gold mine production was higher by 0.9% in June 2022 compared with the last year. The export earnings of gold from Australia are predicted to increase by 10% in 2022-23. Australian gold production is expected to rise at an average annual rate of 6.5% in the next two years, i.e. 2022-23 and 2023-24, as per the Energy and Resources Quarterly September 2022 Report.

Some of the major ASX gold stocks are Newcrest Mining Limited (ASX:NCM), Gold Road Resources Limited (ASX:GOR), Regis Resources Limited (ASX:RRL), Evolution Mining Limited (ASX:EVN), Northern Star Resources Limited (ASX:NST), and Perseus Mining Limited (ASX:PRU).

The rally in the gold prices affected the prices of gold stocks across the globe. Let’s look at the recent performance of some ASX gold stocks.

Newcrest Mining Limited (ASX:NCM)

Newcrest is among the world's largest gold mining companies and also the largest gold producer listed on the ASX. The company has gold mining assets in British Columbia, New South Wales, Niolam Island, Western Australia, and Papua New Guinea.

The ASX 200 index reached higher than the 7,000-point mark at the start of November 2022. At the same time, the shares of Newcrest surged by 5.67%.

The released minutes of the US Fed latest policy meetings indicated that the central bank will look to moderate hikes in interest rates. This favored the price of gold to surge. Also, the Newcrest share price increased by 2.79%.

The World Gold Council reported that global central banks bought gold bullion at the fastest rate in the third quarter of 2022. The gold price increased by 6.5% compared with last month. 

Image Source: Shutter2u |

Northern Star Resources Limited (ASX:NST)

Australian gold producer Northern Star has high-prospect projects located in North America and Western Australia. The portfolio of the company has high-quality, high-margin underground and open-pit gold mines.

The share price of Northern Star surged by more than 20% in November 2022, experiencing an 18% increase compared with its value in October 2022, amid rising commodity prices.  

The price of gold bullion rose by 5.8% in November alone. Northern Star reported a strong balance sheet in its September quarterly report, which provided strong support to the share price. The US Fed also maintained a dovish stance.

Evolution Mining Limited (ASX: EVN)

Australian gold mining company Evolution Mining has projects across Australia and Canada. It fully owns mines in Cowal (New South Wales), Mungari (Western Australia), Mt Rawdon, and Ernest Henry (Queensland) and Red Lake (Ontario). The company announced in November that it had intersected significant new copper-gold extensions at Ernest Henry mine. 

Compared with last month, the shares of EVN rose by 30% in November 2022.

In the September quarter report, the company reported that it had maintained its production. The Red Lake mine had improved metrics. The first stop ore mined from the Campbell site had the highest-grade ore reserve at Red Lake.


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