S&P/ASX 200 Index (ASX: XJO) gold shares are rocketing out of the blocks on Monday.
At the time of writing, Northern Star Resources Ltd (ASX: NST) shares are up 8.7%.
Newcrest Mining Ltd (ASX: NCM) shares are up 6.8%.
And Evolution Mining Ltd (ASX: EVN) shares are up 10.3%.
Boom!
The blue-chip Aussie gold miners' surge is helping send the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains smaller miners outside of the ASX 200 gold shares – up a whopping 8% in early trade.
This comes as the benchmark index is down 0.45% following weakness in US and European markets on Friday.
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What's driving ASX 200 gold shares higher today?
Investors are bidding up the ASX 200 gold shares following a big leg up in the gold price.
On Friday, the miners came under pressure as the yellow metal's rally faltered and the price slipped to US$1,923 per troy ounce.
Over the weekend, the rally regained steam to see gold trading for US$1,989 per ounce. It's slipped a tad since, currently trading for US$1,977 per ounce, up 2.8% from Friday's levels.
Gold – and ASX 200 gold shares – have benefited from the global uncertainty stemming from the banking crisis unfolding in the United States and Europe.
Investors have again upped their exposure to the yellow metal, a classic haven asset, with economists increasingly forecasting that the financial instability will see the US Federal Reserve, and other central banks, ease off on the past year's rapid interest rate hikes.
Less aggressive rate hikes amid still high inflation would offer further tailwinds for gold, which doesn't offer any yield itself.
Commenting on the outlook for gold — and, by extension, ASX 200 gold shares — TD Securities global head of commodity strategy Bart Melek said (courtesy of Kitco News) said, "Markets are concluding that we'll see the Fed go for another 25bps increase and then probably sit on it for a while and see what happens."
Melek added:
The view from the gold perspective is that given disruptions in the banking system and the US Treasury Department's willingness to help, we might get accommodation that allows inflation to hang around longer at a higher level. This is a good thing for gold.
