What’s the outlook for the Northern Star (ASX:NST) share price?

Gold has slipped from recent highs but remains up more than 5% year-to-date.

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Key points

  • The Northern Star share price has trounced the benchmark this year
  • Gold prices have gained 5.2% year-to-date amid rising uncertainty
  • Expert believes the yellow metal will run higher from here

The Northern Star Resources Ltd (ASX: NST) share price was slipping today, down 1.98% in late afternoon trade.

The S&P/ASX 200 Index (ASX: XJO) gold miner closed yesterday at $10.60 and was trading at $10.39 per share at the close today.

Despite today’s slide, the Northern Star share price remains up 10.5% in 2022.

Among its tailwinds, the miner has been the beneficiary of rising bullion prices.

Investors faced with uncertainty over the pace of inflation and even great geopolitical uncertainty over Russia’s brazen invasion of Ukraine have turned to gold as a haven asset.

On 1 January, an ounce of bullion was worth US$1,829. Today that same ounce is worth US$1,924, a gain of 5.2%.

That’s the past few months’ action.

Now what?

What’s ahead for the Northern Star share price?

There are numerous factors that determine a company’s share price.

For the Northern Star share price, those include (but are not limited to) the quality of its assets, the quality of its management, any new gold strikes it may hit, as well broader investor sentiment based on global macroeconomic and geopolitical conditions.

Atop those, the market price of the gold the miner digs from the ground will undoubtedly have an impact on the Northern Star share price.

So, what’s the outlook for bullion prices?

For that answer we turn to Jordan Elise, manager of listed products and investment research at the Perth Mint.

Speaking to Live Wire, Elise said he believed gold prices were set to march higher in 2022.

Elise admitted that not everyone agreed, with some analysts saying the yellow metal’s “inability to hold onto the US$2,000 per ounce level” indicated the gold market could see a repeat of the price crash that occurred in 2011.

But Elise said the current conditions in global gold markets were quite different.

“Gold looks to be in a far healthier position relative to 2011,” he said. “Sentiment is far more subdued, while it is coming off a 10-year period of underperformance relative to risk assets, rather than the opposite.”

Elise continued:

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,” Elise concluded, “these factors suggest gold’s bull market run could well continue.”

If gold prices do continue to run higher, it will certainly offer a healthy tailwind for the Northern Star share price.

Northern Star snapshot

Shares are down 37% from their 6 November 2020 all-time highs. But long-term shareholders will have little to complain about, with the Northern Star share price up 155% over the past 5 years.

The miner also pays a dividend yield of 1.9%, fully franked.

At the current Northern Star share price, the company’s market cap stands somewhat north of $12.1 billion.

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 Bruce Jackson.

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