Australian gold producers have had a strong start this morning despite another slide on Wall Street. St Barbara Ltd [ASX:SBM] is up 7.91% this morning to $4.025 on the back on of gold’s strongest gain in two years.
Fears of market volatility and record rates for treasury bonds have spurred on a surge in gold prices, lifting the fortunes of gold stocks.
Other Australian gold stocks have also made significant gains, taking out seven of the top eleven spots on the ASX 200 this morning.
What’s caused the jump?
Gold bottomed out at US$1,060 per ounce this August, but has now risen to US$1,222 per ounce overnight. This follows a jump of near 3% — investors are clearly looking for less-volatile assets after this week’s global sell-off.
The quickly rising gold prices seem to be giving a much needed boost to the struggling gold producers as much of the ASX continues to cop a beating as the turmoil in US markets continues.
News out of St Barbara has also helped its position, announcing a $7 million joint venture agreement with Australian Potash Ltd [ASX:APC] at the Lake Wells Gold Project.
What’s next for St Barbara?
Gold prices are still down about 12% in the past six months, so just how long this respite will last is anyone’s guess. With investor demand for good returns now sated thanks to high long-term interest rates for Treasury bonds, gold also appears to be an attractive buy.
If the volatility remains, fears over a falling stock market and rising inflation can expect to fuel further rises in the price of gold. This will come as a welcomed new for St Barbara and other Australian gold producers, many of whom have experienced a steady decline in share price this year.
For Money Morning
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