S&P/ASX 200 Index (ASX: XJO) gold shares are broadly underperforming the index today.
While the ASX 200 is up 0.53% in afternoon trade, the Newcrest Mining Ltd (ASX: NCM) share price, for example, is down 1.73%.
Meanwhile, the Evolution Mining Ltd (ASX: EVN) share price is down 2.25%, while rival ASX 200 gold share Northern Star Resources Ltd (ASX: NST) has slid 1.9%.
But that's just today's snapshot market action.
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How have these ASX 200 gold shares performed so far in 2022?
Year-to-date, the gold miners have been benefiting from a significant uptick in bullion prices.
An ounce of gold is currently worth US$1,924, up 5.2% year-to-date.
That's helped deliver a 4.53% gain for Newcrest shares; a 7.4% gain for Evolution shares; and a 10.6% boost in the Northern Star share price in 2022 so far.
And it's seen the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller-cap miners outside of the ASX 200 gold shares – rally 7.4% so far this year. That compares to a year-to-date loss of 2.8% for the ASX 200.
But with these gains already banked, could the gold miners run higher in 2022?
The bullish case for gold
While many factors determine a company's share price, when you're looking at ASX 200 gold shares, you can't ignore the price of the yellow metal they dig from the ground.
And according to the manager of listed products and investment research at the Perth Mint, Jordan Elise, bullion is poised for higher prices in the year ahead.
Speaking to Live Wire, Elise said over the past week, gold prices were negatively impacted partly due to COVID-19 cases surging in key consumer markets.
He added that the strong rally in risk assets over the past week – which saw the tech-heavy Nasdaq gain 6.8% – alongside the looming rate rise from the US Federal Reserve "were additional headwinds for gold".
Elise pointed out that the precious metal's "inability to hold onto the USD US$2,000 per ounce level has seen some commentators suggest we may see a repeat of what happened back in 2011".
In 2011, when gold last traded around US$1,900 per ounce, the bubble burst. Three years later, in 2015, gold traded for $800 an ounce less, fetching as low as US$1050 an ounce.
But Elise is not buying into the 2011 scenario.
According to Elise:
Gold looks to be in a far healthier position relative to 2011. Sentiment is far more subdued, while it is coming off a 10-year period of underperformance relative to risk assets, rather than the opposite.
Investor allocations are also more modest, while gold is not overbought today, whereas it was in 2011.
Finally, the yield environment, valuations in financial markets, and inflationary dynamics are all more supportive for the precious metal today, as is silver's price, which remains cheap on a relative basis
Combined, these factors suggest gold's bull market run could well continue.
Should gold's bull run continue, it will certainly come as welcome news to ASX 200 gold shares.
