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ASX Gold Stocks: The Impact of US-China Trade Talks
Recent developments concerning a truce in the US-China tariff dispute have significantly influenced investor sentiment, leading to a notable sell-off among gold stocks listed on the ASX (Australian Securities Exchange). The shift has directed interest away from gold miners and other safe-haven assets like Woolworths and Commonwealth Bank, pushing investors towards sectors anticipated to experience growth.
As a result, gold prices fell by 2.7% to US$3,230 per ounce, marking a decline of 5.9% over three out of the previous four trading sessions. This decrease represents the lowest price level since mid-April 2025, largely influenced by the ongoing discussions surrounding trade de-escalation.
Gold Miner Performance
On a recent Tuesday session, major gold miners experienced sharp declines, averaging around 8% lower by the afternoon. Despite this downturn, these stocks have still recorded an impressive average gain of 35% year-to-date.
Here’s a closer look at the performance of key ASX gold miners, along with their price-to-earnings (PE) ratios and year-to-date gains:
| Ticker | Company | % Change | Price | 12m Fwd PE | PE | Year-to-Date |
|---|---|---|---|---|---|---|
| CMM | Capricorn Metals | -12.31% | $8.26 | 21.7 | 41.9 | 30.70% |
| RMS | Ramelius Resources | -10.70% | $2.42 | 6.7 | 8.1 | 15.79% |
| GMD | Genesis Minerals | -10.34% | $3.69 | 18.8 | 32.4 | 49.19% |
| RRL | Regis Resources | -9.96% | $4.21 | 13.8 | ~ | 63.62% |
| OBM | Ora Banda Mining | -9.81% | $0.95 | 13.5 | 27.7 | 45.69% |
| PRU | Perseus Mining | -8.99% | $3.24 | 8.7 | 8.3 | 25.10% |
| SPR | Spartan Resources | -8.95% | $1.91 | ~ | ~ | 32.78% |
| WGX | Westgold Resources | -8.30% | $2.60 | 11.2 | 33.5 | -8.63% |
| WAF | West African Resources | -8.06% | $2.23 | 5.2 | 10.8 | 55.59% |
| EVN | Evolution Mining | -7.52% | $7.69 | 16.4 | 22.1 | 59.11% |
| VAU | Vault Minerals | -7.42% | $0.41 | 10.3 | 54.2 | 24.85% |
| EMR | Emerald Resources | -6.63% | $4.16 | 19.7 | 28.3 | 27.85% |
| NST | Northern Star Resources | -6.15% | $18.01 | 16.8 | 22.0 | 16.95% |
| NEM | Newmont | -3.28% | $78.20 | 11.6 | 11.4 | 30.12% |
| GOR | Gold Road Resources | -1.83% | $3.21 | 13.2 | 24.5 | 55.07% |
Data as of 1:00 PM AEDT, Tuesday, 13 May 2025 (Source: TradingView)
While the current valuations appear to reflect the intensifying gold price climate, caution is advised as low PE ratios may mislead investors. During commodity booms, miners can seem ‘cheap’, indicating a potential peak, whereas falling commodities may inflate their valuations.
Future Directions
The recent US-China tariff agreements—substantially reducing tariffs—have positively influenced global economic outlooks, leading to increased activity in equities and commodities, albeit with gold being an exception. Other noteworthy trade developments include:
- A trade agreement between the US and UK aimed at reducing tariffs on UK car imports and eliminating tariffs on UK steel and aluminium.
- Ongoing tariff negotiations involving the US with Japan, South Korea, and India.
- A US-brokered ceasefire between India and Pakistan that has eased regional tensions.
Analysts from Macquarie project that defensive sectors like gold may lag further as market sentiment increasingly favours riskier investments.
Gold Price Projections
Despite the recent price decline, a bullish outlook for gold remains. JPMorgan has projected prices might rise to US$3,675 per ounce by the end of this year and reach US$4,000 by mid-2026. Goldman Sachs has similarly adjusted its price target upwards to US$3,700. However, these aggressive forecasts could signify a peak in market cycles. Furthermore, the World Gold Council has noted consistent investment in gold ETFs, with substantial inflows over the previous months.
Identifying Value in Gold Stocks
When it comes to scouting for valuable investments in gold stocks, analysts typically focus on production growth and net asset value (NAV). Stocks rated positively often trade at slight discounts relative to their NAV while demonstrating substantial short to medium-term growth plans. Two noteworthy examples include:
-
Capricorn Metals: Goldman Sachs maintains a Buy rating, highlighting its attractive valuation and potential for growth. Currently trading at approximately 0.95x NAV, it shows robust potential with expansion projects underway.
- Newmont: With a Buy rating from Goldman Sachs, Newmont stands out for trading at approximately 5x EBITDA, compared to peers at higher multiples. Despite being undervalued, it continues to exhibit strong production growth prospects.
In summary, while the gold sector appears volatile and defensive in the current market, careful analysis and consideration of underlying company fundamentals could uncover promising opportunities for investors moving forward.
