S&P/ASX 200 Index (ASX: XJO) gold shares are in the green today and also solidly up for the week.
The gold stocks have benefited from a boost in the gold price.
Gold edged 0.3% higher overnight, currently trading for US$1,794.81 per troy ounce. That puts the yellow metal up 1.5% since Monday's opening bell.
While the ASX 200 is down 1.5% since trading commenced on Monday, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold shares outside of the ASX 200 – has gained 0.4%.
But the big gold producers have done much better. Here's how their shares have moved this week:
- Northern Star Resources Ltd (ASX: NST) shares are up 1.1%
- Newcrest Mining Ltd (ASX: NCM) shares are up 1.7%
- Evolution Mining Ltd (ASX: EVN) shares are up 4.2%
What's been happening in the world of gold?
With no price-sensitive news out from the ASX 200 gold shares this week, investors look to have rewarded them for the lift in gold prices, and a potentially solid outlook for the yellow metal heading into 2023.
That solid outlook is supported by a surge in bullion demand from global central banks.
As we reported on 24 November, the World Gold Council "revealed that the third quarter of 2022 saw global central banks buying bullion at the fastest rate ever, loading up on gold worth some $20 billion".
The biggest identified buyers at the time were the central banks of Turkey, Qatar, and Uzbekistan.
But only some 25% of the gold splurge buying was publicly reported at the time.
This saw market watchers, including Justin McQueen, senior market analyst at Capital.com, speculate that China's central bank may have been behind some of the surge in demand.
"The rationale is that China would look to reduce their exposure to the US dollar and therefore has been stockpiling on gold," McQueen said.
He added that central banks "excessively accumulating" gold "does provide an undercurrent of support for the precious metal". That, in turn, would help support ASX 200 gold shares.
Indeed, the China speculation has now proven to be a fact.
As Bloomberg reports, the People's Bank of China raised its bullion holdings by 32 tonnes in November. It was the first time China reported increasing its gold reserves in more than three years.
With 1,980 tonnes of bullion reserves, the PBoC has the sixth-largest holding in the world.
According to Giovanni Staunovo, an analyst at UBS Group AG, "Gold holdings in China as part of the total reserves are still very low, so there is probably room for further purchases down the road."
Nicky Shiels, head of strategy at MKS PAMP SA, added, "As deglobalisation accelerates, the non-G-10 nations are expected to 're-commoditise' and ramp up gold holdings."
That too could offer some tailwinds for ASX 200 gold shares in 2023.
How have these ASX 200 gold shares performed over the year?
Over the past 12 months, the Newcrest Mining share price is down 9%; Northern Star shares are up 20%; and the Evolution Mining share price has lost 25%.
You can see the past year's price action for the ASX 200 gold shares below.
