ASX 200 gold shares just added billions of dollars to their valuations. What's going on?

It's not just an uptick in the gold price that's seeing ASX 200 gold shares rocket today.

Girls at a party are surrounded by gold streamers, a golden ball and are having a fun time.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

S&P/ASX 200 Index (ASX: XJO) gold shares are enjoying an absolutely stellar run higher today.

During the Thursday lunch hour, the ASX 200 is up a very solid 1.4%.

You're unlikely to hear any complaints about that performance.

But it pales in comparison to the gains being realised by most Aussie gold stocks.

This sees the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller miners outside of the ASX 200 – up a whopping 6.1%.

Here's how these top ASX 200 gold shares are tracking at this same time:

  • Northern Star Resources Ltd (ASX: NST) shares are up 7.4%
  • Newmont Corp (ASX: NEM) shares are up 5.1%
  • De Grey Mining Ltd (ASX: DEG) shares are up 7.6%
  • Ramelius Resources Ltd (ASX: RMS) shares are up 5.3%
  • Gold Road Resources Ltd (ASX: GOR) shares are up 7.6%
  • Evolution Mining Ltd (ASX: EVN) shares are up 4.9%
  • Bellevue Gold Ltd (ASX: BGL) shares are up 4.4%

And mind you, these are all multi-billion-dollar gold producers.

The intraday gains posted by Northern Star alone just added $1.1 billion to the miner's market cap.

I'll let you do the rest of the maths for total dollar gains from the above list of ASX 200 gold shares.

But trust me, it's big!

So, what's driving this surge?

Why are ASX 200 gold shares rocketing on Thursday?

Investors have US Federal Reserve chair Jerome Powell, and the Federal Open Market Committee (FOMC) to thank for today's sharp rally.

As we reported earlier, while most Aussies were asleep, the FOMC voted unanimously to keep the benchmark US interest rate on hold in the target range of 5.25% to 5.50%. This marks the third consecutive meeting that the world's most influential central bank has held rates on hold as Powell signalled that inflation was coming under control in the US.

Gold, which pays no yield itself, tends to catch headwinds from higher rates.

And in the wake of the Fed's decision the gold price gained 0.4% to US$2,034 per ounce. It's since retraced a touch, trading for US$2,031 per ounce. That's up from US$1,979 per ounce on Tuesday.

But it's not just the widely expected pause that's seeing ASX 200 gold shares soaring today.

With inflation coming down while the US jobs market remains strong, some dovish language from the FOMC has upped the odds that the Fed will begin cutting interest rates in 2024.

According to Brent Donnelly, president of Spectra Markets (quoted by Bloomberg), "Powell gave a nod to the outside chance of another hike but sent a clear signal that the FOMC has changed direction, and the question is not if they cut, but when."

If the Fed does start reducing interest rates next year, ASX 200 gold shares could be in for some more welcome tailwinds.

Motley Fool contributor Bernd Struben 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.

More on Gold

Two men in hard hats and high visibility jackets look together at a laptop screen at a mine site.
Gold

Macquarie predicts 15% upside for this ASX mining stock

Here's what the leading broker is tipping as a buy this week.

Read more »

Miner puts thumbs up in front of gold mine quarry
Gold

Why Macquarie expects this ASX 200 gold stock to surge 55%

Macquarie forecasts a big rebound ahead for this beaten down ASX 200 gold miner.

Read more »

An older female ASX investor holds a gangster-style fist pump pose showing off gold rings with dollar signs on them.
Broker Notes

Why Macquarie forecasts Northern Star shares are set to surge 55%

Macquarie believes Northern Star shares are well-placed to rocket higher.

Read more »

Woman holding gold bar and cheering.
Gold

Beaten-down ASX 200 gold stock leaping higher today as records tumble

Investors are piling into the beaten-down ASX 200 gold miner today. But why?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Gold

Down 30% since April, should I buy the dip on Northern Star shares today?

A leading expert delivers his verdict on Northern Star shares.

Read more »

Image from either construction, mining or the oil industry of a friendly worker.
Gold

Guess which $107 billion ASX 200 gold stock is storming higher today on record results

The $107 billion ASX 200 gold miner is storming higher today. Here's why.

Read more »

Happy man working on his laptop.
Energy Shares

Opportunity knocks: 2 ASX stocks ready to surge

Analysts expect big things from these shares.

Read more »

Miner looking at a tablet.
Gold

Up 58% this year, ASX 300 gold stock reveals 600,000 ounce African MRE

The ASX 300 gold stock is growing its mining footprint in Senegal.

Read more »