Why gold stocks shined while ASX lost sheen

Highlights 

  • Australian benchmark index, the ASX 200, ended 1.1% lower on Wednesday.
  • The broader ASX gold index gained 2.3% in an otherwise weaker broader market.
  • St Barbara, Regis, Silver Lake Resources and Evolution Mining were among the top gainers on the ASX pack.

The Australian share market witnessed a sharp sell-off on Wednesday, with benchmark index, the ASX 200, hitting its lowest level in four months, amid renewed concerns about inflation and rising bond yields. The index ended 1.08% lower at 7,196.70, paring some of the early losses.

The equity market witnessed broad-based selling with 10 of the 11 sectors ending in red, barring utilities. The tech sector was badly hit in the sell-off as a spike in bond yields soured investor appetite for interest rate-sensitive tech stocks.

Bucking the bearish trend, the broader ASX gold index, the S&P/ASX All Ordinaries Gold (XGD), gained 2.3% as weak equities made bullion more appealing for traders. The rise in the price of yellow metal also fuelled demand for gold-related stocks. Gold spot price was quoting at around US$1,739 per troy ounce, up 0.3%, at the time of reporting.

Index heavyweights St Barbara (ASX: SBM), Regis Resources (ASX: RRL), Silver Lake Resources (ASX:SLR) and Evolution Mining (ASX:EVN) were among top performers on the ASX.

Top five gold stocks

Here are five ASX-listed gold stocks that emerged as the biggest gainers today:

 Data Source: ASX Website (as of 29 September 2021, 5:00 PM AEST)

Gold miner St Barbara (ASX:SBM) was the top performer on the ASX pack with a 6.9% gain. During the day’s trade, the stock gained as much as 7.87% to hit an intraday high of AU$1.37.

St Barbara was followed by Regis Resources (ASX: RRL), which closed 6.3% higher at AU$2.02. Meanwhile, the index heavyweight Silver Lake Resources (ASX: SLR) closed 5.51% higher. It rose 6.3% in intraday trade to touch a high of AU$1.35. While Evolution Mining (ASX:EVN) gained 4.2%, Perseus Mining  (ASX:PRU) added 3.3%. 

Some of the other top performers across the sectoral space were Northern Star Resources Limited (ASX:NST), Newcrest Mining Limited (ASX:NCM) and Ramelius Resources (ASX: RMS).

Why investors bet on gold stocks

The broader ASX gold index rose 2.3% on Wednesday

Image source: ID 1903797 © Anchesdd | Megapixl.com

Gold stocks, often viewed as an inflation hedge, saw a surge in buying in an otherwise weak broader market, as investors shifted focus from risky assets to safer assets like gold and the dollar. Investors rushed towards the traditional safe-haven asset, gold, as other industries crumbled due to economic disruption caused by the COVID-19 pandemic.

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