About a month ago, my colleague Zach posed the question: Is the Northern Star share price on the comeback trail?
It appears to have been a keen observation, with the Northern Star Resources Ltd (ASX: NST) share price soaring by more than 20% over the past four weeks.
The gold miner is currently trading at $10,00, up 6.38% for the day so far. It appears to be riding high alongside many other ASX 200 mining shares on the back of rising commodity prices.
The S&P/ASX 200 Materials (ASX: XMJ) is the best-performing sector so far today, up 2.28%.
Why is the Northern Star share price rising?
Gold — and, by extension, ASX gold shares — is typically considered a safe haven for investors in tough economies, and a decent inflation hedge.
But this hasn't been the case in 2022, with Fidelity International's Tom Stevenson saying that belief is a myth.
Indeed, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is down 16% in the year to date. And the price of the yellow metal itself is down 7.55% year over year, according to Trading Economics.
Aggressive interest rate hikes in the United States haven't been good for the price of gold. This is because gold delivers no yield to an investor keeping bullion in their home safe. By comparison, cash looks more appealing now that interest on savings in the bank is rising for the first time in more than a decade.
But after four consecutive 0.75% rate hikes in the US, the market is doing its usual thing and looking forward.
The Fed will stop raising rates eventually, widely tipped to be at some point next year, and that's going to be good for gold shares.
So, perhaps some investors have seen a buy-the-dip opportunity with the Northern Star share price in recent weeks.
Plus, the US dollar is weakening on lower consumer confidence data, and as my colleague Bernd points out, a weaker greenback supports the value of gold, which is priced in US dollars.
The gold price has gone up 4.5% over the past week to US$1,707 per ounce at the time of writing.
According to Trading Economics, gold is at its highest point in more than a month, up 2.4% over the period.
What about company news?
There is no news out of Northern Star today or in November so far, apart from daily share buyback notices.
For the record, as of yesterday, Northern Star has purchased 14.68 million shares since it announced its $300 million share buyback in August.
This is the first share buyback ever undertaken by Northern Star. The miner has spent $109.4 million so far.
The only significant piece of company news released to the ASX over the past four weeks was the miner's September quarter activities report.
The market didn't like that the results were 'slightly below plan', and the Northern Star share price dropped on the day.
So, on the whole, it seems macroeconomic factors have done the heavy lifting on the Northern Share share price over the past month.
What do the experts think?
In his article on 13 October, Zach noted that 15 out of 15 analysts rated Northern Star shares a buy, with a consensus price target of $10.70, according to Refinitiv Eikon data.
Shaw and Partners portfolio manager James Gerrish is also optimistic. As Tony Yoo reported last month, Gerrish said the 'rally could be hard and fast' for the Northern Star share price.
Gerrish said:
Northern Star has held up better than most of its peers over recent weeks but it's still been a tough year for the gold miner. We believe this stock offers good value at current levels and when the sentiment turns for the sector the rally could be hard and fast.
At the time, the Northern Star share price was trading about $8.50.
As for the gold price, BMO Capital Markets reckons it could stay around today's level for a while.
The broker forecasts a modest uptick in bullion prices in 2023 with good support until 2026. The broker tips an average price of US$1,680 from April to June 2023.
