Why are ASX 200 gold shares leading the market today?

rising gold share price represented by a green arrow on piles of gold blockrising gold share price represented by a green arrow on piles of gold block

ASX 200 gold shares are leading the market on Wednesday as investors plough more funds into the traditional safe-haven assets of the share market.

A softer United States currency is one factor behind renewed interest in gold stocks this month.

Let’s see which ASX 200 gold shares are leading the pack today.

Which ASX 200 gold shares are outperforming?

The top 5 ASX 200 shares today (in order of share price growth) are as follows:

  • The Gold Road Resources Ltd (ASX: GOR) share price is up 5.15% to $1.89
  • The Evolution Mining Ltd (ASX: EVN) share price is up 3.92% to $3.58
  • The West African Resources Ltd (ASX: WAF) share price is up 3.32% to $1.01
  • The Silver Lake Resources (ASX: SLR) share price is up 3.27% to $1.27
  • The Northern Star Resources Ltd (ASX: NST) share price is up 2.61% to $13.95

Only one of these ASX 200 gold shares has company news today. That’s West African Resources.

What news is driving West African Resources shares?

West African Resources is a gold miner and developer with operations in Burkina Faso in West Africa.

Its flagship mine is the Sanbrado Gold Project. It also has other gold and copper-gold exploration permits in the same area.

West African Resources released its activities report and cash flow report for the March quarter today.

The company reported a 13% increase in gold production compared to the December quarter and reduced all-in sustaining costs.

It achieved unhedged gold sales of 48,208 ounces at an average price of US$1,878 per ounce. It generated $29 million of operating cash flow during the period.

As of 31 March, the company had $160 million cash on hand and $32 million in unsold gold bullion.

Executive Chairman and CEO Richard Hyde said:

We continue to benefit from rising gold prices as an unhedged gold producer, bolstering our cash
and bullion on hand, while investing in our growth.

WAF’s 100% unhedged Mineral Resources and Ore Reserves now stand at 12.6 million ounces and 6.4 million ounces of gold, respectively, following successful exploration drilling and feasibility programs in 2022.

Why is the gold price rising?

An improving gold price is benefitting all ASX 200 gold shares at the moment.

The commodity price breached the US$2,000 per ounce mark earlier this month. It hadn’t traded that high since March 2020 when it hit an all-time peak of US$2,069.40.

Today, the gold price is currently trading at US$1,997.85, down 0.1% at the time of writing.

The market is awaiting a series of economic data sets in the US this week on inflation, consumer sentiment, and Q1 gross domestic product (GDP).

The market is expecting another 0.25% increase in US interest rates when the Federal Reserve meets next week. However, Fed Fund futures indicate a more than 60% chance of a mid-year pause.

This is because of fears the US economy may be heading for recession.

We are yet to see whether the Fed’s monetary policy tightening has arrested inflation without causing an economic meltdown.

The Dallas Fed reports a continuing reduction in factory operations in Texas this month, and the highest monthly fall in nine months.

According to Trading Economics analysis, this is “highlighting the toll elevated borrowing costs took on the economy”.

Investors are also concerned that the US Treasury Department could reach its debt limits in the coming months. This is “prompt[ing] investors to avoid certain Treasury bills and pour into other assets”.

Gold typically receives more investor support during times of economic uncertainty.

The yellow metal is up 2.28% for the month and 5% year over year, according to Trading Economics.

What do the experts think?

Argonaut Resources portfolio manager David Franklyn believes gold will continue to outperform, boding well for ASX 200 gold shares.

Franklyn says:

We think there’s good dynamics around gold and gold companies. The margins will be improving with costs and gold price going up.

The post Why are ASX 200 gold shares leading the market today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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