The sub-index of Australian gold stocks (INDEXASX: XGD) surged as much as 3.23% on Friday, reaching its highest level since 22 May 2024. This marks the ninth consecutive session of gains, positioning the sub-index for a remarkable 6.6% weekly gain, the best in four months if the trend continues.
Gold Prices Drive Rally
The recent rally in gold stocks is primarily driven by a significant jump in gold prices. On Thursday, gold prices soared more than 2% and remained steady early on Friday. This increase was fuelled by cooler-than-expected U.S. Consumer Price Index (CPI) data, which has sparked hopes that the Federal Reserve might start cutting interest rates as early as September. The prospect of lower rates tends to boost gold prices, as it reduces the opportunity cost of holding the non-yielding asset.
Notable Performers in the Gold Sector
Several key players in the Australian gold sector have seen significant gains. Northern Star Resources (ASX: ASX:NST) jumped 3.8%, reaching its highest level in three weeks. ASX-listed shares of Newmont Corp (ASX: NEM) advanced 3.6%, hitting an all-time high. Resolute Mining (ASX: RSG) experienced a substantial rise of 5.8%, reaching its highest level since February 2021. Similarly, Evolution Mining (ASX: EVN) climbed 3.7%, marking a more than one-month high.
Comparative Performance
As of the last close, the XGD has risen 5.8% this year, outpacing the benchmark index (INDEXASX: XJO), which has gained 3.9% over the same period. This strong performance underscores the robust investor confidence in the gold sector, driven by favorable economic conditions and optimistic market sentiment regarding potential rate cuts.