S&P/ASX 200 Index (ASX: XJO) gold shares are enjoying some healthy tailwinds from a fast-rising gold price.
So far in 2023, the S&P/ASX All Ordinaries Gold Index (ASX: XGD), which also contains some smaller gold stocks outside of ASX 200 gold shares, has gained a whopping 30.0%.
That's more than five times the 5.9% gains posted by the ASX 200 over that same period.
And with the gold price approaching new all-time highs, there may be more outperformance to come.
What's happening with the gold price?
ASX 200 gold shares have been benefiting from several factors that are helping drive the gold price higher.
First, investors have been buying the classic safe-haven asset amid rising concerns of a recession in the United States and much of the rest of the world.
Second, investors are increasingly pricing in a near-term end to interest rate hikes by the US Federal Reserve. That increases the appeal of bullion, which pays no yield and is priced in US dollars.
Third, geopolitical uncertainty remains high amid Russia's ongoing war in Ukraine and rising tensions between China and Taiwan and the island nation's Western allies.
All told, this has seen the gold price rocket from US$1,839.48 per ounce on 3 January to US$2,041.92 today, a gain of 11.0%.
That's within a whisker of the yellow metal's all-time high of US$2,075 per ounce on 7 August 2020.
But bullion could well surpass that record in the months ahead, further fuelling profits for ASX 200 gold shares.
Mike Novogratz, the founder of Galaxy Digital Holdings, is among those with a bullish outlook for gold amid expectations of upcoming easing from the Fed.
"The clearest trades have been and will continue to be long gold, long the euro, long Bitcoin, long Ethereum — these assets that should do well with the Fed stopping hiking and then cutting," Novogratz said (courtesy of Bloomberg).
And Citi is forecasting gold will hit US$2,300 over the next 12 months, well surpassing its 2020 record highs.
According to Aakash Doshi, senior commodities strategist at Citi:
We are structurally bullish gold … into end-2023. It appears the price floor … is now higher and buttressed by an evolving central bank narrative, the compression in real yields at the belly of the US rates curve, and potential US dollar peak.
Two ASX 200 shares benefiting from a rising gold price
Among the leading gold miners investors can consider adding to their portfolios amid a rising gold price are Regis Resources Ltd (ASX: RRL) and Northern Star Resources Ltd (ASX: NST).
The Northern Star share price is up 29.4% so far in 2023, currently at $14.39 per share.
The ASX 200 gold share retained its full-year guidance when it reported its half-year results in February. Northern Star expects full-year gold sales of 1,560 to 1,680 ounces at an all-in sustaining cost (AISC) of $1,630 to $1,690 per ounce.
Northern Star trades on a trailing dividend yield of 1.6%, fully franked.
The Regis Resources share price has also been riding high on the rising gold price, with shares up 17.5% in 2023. The gold miner is currently trading for $2.42 per share.
On reporting its half-year results, Regis also maintained its production guidance for the full 2023 financial year. The ASX 200 gold share forecasts total gold production of 450,000 to 500,000 ounces at an AISC of $1,525 to $1,625 per ounce.
(Note, the costs quoted here for both miners are in Aussie dollars. Today's gold price is AU$3,012 per ounce.)
Regis trades on a fully franked trailing dividend yield of 0.9%.
Credit Suisse analysts are bullish on both ASX 200 gold shares.
Credit Suisse has a price target of $14.50 on Northern Star shares and $2.70 on Regis Resources shares.
