Here’s why ASX gold shares are surging today

Here’s why ASX gold mining shares like Newcrest Mining Limited (ASX: NCM) are outperforming the AS&P/SX 200 Index (ASX:XJO) today
The post Here’s why ASX gold shares are surging today appeared first on Motley Fool Australia. –

asx gold share prices

Last week, the S&P/ASX 200 Index (ASX: XJO) had a fantastic few days at the end there. The prospects of a Biden presidency together with a divided Congress helped push ASX 200 shares up by more than 4% over the week, with a 1.3% gain on Thursday and a further 0.82% on Friday. Today, this trend seems to be continuing into the new week, with the ASX 200 up another 1.68% at the time of writing to 6,294 points.

One of the sectors outperforming even these impressive gains is ASX gold miners. The ASX’s largest gold miner – Newcrest Mining Limited (ASX: NCM) was up 4.77% over last week and 3.54% on Friday alone. Today, it’s up another 0.91%. Other ASX gold miners enjoyed similar moves. Northern Star Resources Ltd (ASX: NST) was up more than 7% on Friday and up another 0.36% today. Resolute Mining Limited (ASX: RSG) is displaying similar moves, as is Gold Road Resources Ltd (ASX: GOR).

Why are ASX gold miners shining as of late, ahead even of bullish performances by the ASX 200? It’s probably got something to do with the gold price itself.

Gold shines for investors

Gold can be a strange commodity. It is accepted that gold behaves as a ‘defensive’ or ‘safe haven’ asset, often rising in times of economic or geopolitical uncertainty, and falling when investors are feeling comfortable and less ‘risk-averse’. A week ago, when the markets seemed to be pricing in a Biden landslide and a Democratic ‘blue wave’ as the most likely election result, gold was trading at US$1,882 an ounce.

Today, it is trading at US$1,957.65 an ounce. That’s a 4% increase in just one week.

And that’s probably behind the surging share prices of gold miners like Newcrest and Northern Star.

See, the economics of the mining industry means that the mining companies are ‘leveraged’ in a way to the price of the commodity they mine.

Take Newcrest Mining. In its last annual report, Newcrest told investors that it’s all-in sustaining cost (AISC) of extracting one ounce of gold form its largest mine (Cadia in NSW) was US$843. That means that when gold fetches more than this price, it represents pure profit for Newcrest. It also means that, even though gold rose 4% in value over the past week, Newcrest’s profit margins for Cadia increased from US$1,039.60 an ounce to US$1,114.65 an ounce – an increase of 7.22%.

This same phenomenon applies across all gold miners. And it’s likely for this reason that ASX gold shares are outperforming the ASX 200 today.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of June 30th

More reading

Motley Fool contributor Sebastian Bowen owns shares of Newcrest Mining Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here’s why ASX gold shares are surging today appeared first on Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!