S&P/ASX 200 Index (ASX: XJO) gold shares have broadly enjoyed a great run over the past year.
The S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold miners outside of the ASX 200 gold shares – is up 18% over the past 12 months. That compares to a gain of 1% for the ASX 200.
Although selling off today, gold producers have widely benefited from increased demand for the yellow metal. This has seen gold approach its all-time highs of US$2,075 per ounce. That record was reached in August 2020, amid global angst and central bank money printing as COVID-19 ran rampant.
What's happening with the gold price?
Gold, a classic haven asset, hit US$2,050 per ounce on 4 May, a development certainly welcomed by investors in ASX 200 gold shares.
Bullion has been benefiting from ongoing angst over the banking crisis in the United States, a potential global recession, and geopolitical uncertainty amongst the world's nuclear powers.
A potential end to the successive string of interest rate hikes from the US Fed is also helping the gold price, as gold itself pays no yield.
Over the past few days, the gold price has retraced, currently trading for US$1,993 per ounce.
Which ASX 200 gold share has a 39% upside?
Macquarie is bullish on the outlook for the gold price and believes one of the big miners is trading at a bargain price.
With the range of factors aligned to spur demand for gold, the leading broker said it's a "near enough perfect backdrop" to see bullion hit or exceed its record highs (courtesy of The Australian Financial Review).
While that would offer a tailwind for all ASX 200 gold shares, one of Macquarie's preferred picks is Regis Resources Ltd (ASX: RRL).
The Regis Resources share price has underperformed most of its peers over the past year, gaining 'only' 11%. Shares are currently trading for $2.08 apiece.
The ASX 200 gold share has likely lagged its competitors due to a period of major capital expenditure.
Regis Resources managing director Jim Beyer said $350 million has been invested into the existing operations in "the capital intensive investment phase of the last two years".
Now, he added, Regis is entering "a cash building phase as commercial production is expected to be declared at both Garden Well South underground and Havana open pit".
Macquarie's analysts are positive on that organic growth outlook.
They also flagged the New South Wales government's approval for Regis' McPhillamys gold project. The broker said the expected definitive feasibility study (DFS) at McPhillamys would be "a key catalyst" for the Regis Resources share price.
Macquarie has an outperform rating on the ASX 200 gold share with a price target of $2.90.
That's 39% above the current Regis share price.
