S&P/ASX 200 Index (ASX: XJO) gold shares broadly trounced the benchmark returns over the past 12 months.
Over the last full year, the ASX 200 has gained 6%.
Not bad.
As for the gold miners, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains smaller gold miners outside of the ASX 200 – has rocketed 37%.
Way better.
Here's how these leading ASX 200 gold shares have performed over the full year.
- The Regis Resources Ltd (ASX: RRL) share price is up 30%
- The Northern Star Resources Ltd (ASX: NST) share price is up 77%
- The Evolution Mining Ltd (ASX: EVN) share price is up 35%
- The Gold Road Resources Ltd (ASX: GOR) share price is up 37%
- The Newcrest Mining Ltd (ASX: NCM) share price is up 33%
Those gains have been spurred on by a 10% increase in the gold price since this time last year. The yellow metal was trading for US$1,910 per ounce on Friday.
Of course, all of that gold has already been panned and those share price gains banked.
The question now is, could ASX 200 gold shares help fortify your portfolio in the year ahead?
What's next for ASX 200 gold shares?
While a range of factors will impact the performance of the big gold miners in FY 2024, the price of the yellow metal they dig from the ground will be a key determinant.
For some greater insight into that outlook, we defer to the analysts at Morgan Stanley.
The broker cites three key reasons why the gold price could rise and investors should consider investing in gold in the year ahead. And, as we saw above, ASX 200 gold shares tend to rise (and fall) significantly more than any moves in the gold price.
As a rule, the yellow metal gains when the US dollar falls in value and falls when the greenback gains in value, relative to global currencies.
In a potentially promising sign for ASX 200 gold shares, Morgan Stanley notes, "There is strong potential for a weaker dollar in the second half of 2023, which could drive demand and higher prices for gold."
The analysts also note that falling interest rates could drive up the gold price.
According to Morgan Stanley:
Over the past 25 years, the price of gold has risen about 10% for every percentage point of decline in the inflation-adjusted, or 'real', interest rate of the benchmark 10-year US Treasury bond.
While the Fed may not be quite done hiking rates in the world's top economy, once it does begin to ease, the gold price should receive some tailwinds.
The third reason Morgan Stanley's analysts are bullish on the outlook for gold – and by connection ASX 200 gold shares – is the pace of central bank buying:
In 2022, central banks bought gold at the fastest pace since 1967, at about 1,136 tonnes. This year, central bank purchases hit 228 tons in the first quarter, breaking the first-quarter record previously set in 2013, and there is little indication that the pace will slow.
