Why are ASX 200 gold shares smashing the benchmark returns today?

S&P/ASX 200 Index (ASX: XJO) gold shares are shining brightly today.

In afternoon trade, the ASX 200 is up a healthy 0.5%.

But the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold stocks outside of the ASX 200 – is doing far better, up 3.6%.

As for some of the leading ASX 200 gold shares:

  • Northern Star Resources Ltd (ASX: NST) shares are up 4.0%
  • Newcrest Mining Ltd (ASX: NCM) shares are up 3.0%
  • Evolution Mining Ltd (ASX: EVN) shares are up 5.0%

Why are ASX 200 gold shares outperforming today?

ASX 200 gold shares look to be getting another lift today amid expectations that interest rates in the United States – the world’s top economy – may not rise as fast or as high as the market’s been pricing in.

As gold pays no yield (interest), the gold price has been under pressure as the US Federal Reserve and other central banks the world over have turned to aggressive rate hikes in 2022 to tame soaring inflation.

That’s led to a stronger US dollar as well, depressing gold, which is priced in US dollars. The strong US dollar has also pinched some of gold’s haven status, as the greenback is also a classic safety play in times of global uncertainty.

But with signs emerging that inflation may be slowing in the US, gold’s haven status is coming back into play.

The yellow metal has edged higher over the past week, currently trading for US$1,668 per ounce. That’s up 0.2% overnight and up 2.5% since this time last week.

With ASX 200 gold shares heavily leveraged to the price of bullion, any boost in the gold price or in investor sentiment around the yellow metal will come as welcome news after a difficult six months.

How have the big gold miners tracked over the past week?

The past week’s 2.5% increase in bullion prices has offered some healthy tailwinds to ASX 200 gold shares.

Over the past five trading days, the ASX 200 has gained 2.6%.

Over that same time, the Newcrest Mining share price has gained 6.6%, Northern Star shares are up 13.4%, and the Evolution Mining share price has leapt 16.5%.

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