ASX 200 gold stocks could be in 'a very prime place'. Here's why

A range of factors are lining up to potentially give ASX 200 gold stocks another big boost through 2024.

| More on:
a man in a green and gold Australian athletic kit roars ecstatically with a wide open mouth while his hands are clenched and raised as a shower of gold confetti falls in the sky around him.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It's been a great 12 months to own S&P/ASX 200 Index (ASX: XJO) gold stocks.

And there could be more outperformance to come.

Over the last 12 months, the ASX 200 is up a very healthy 9%.

But gold shares have, as a whole, left those gains in the dust.

Since this time last year, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller miners outside of ASX 200 gold stocks – has soared 39%.

See what I mean?

Drilling down to some of the top names, here's what they've returned to investors over 12 months, not including dividends:

  • The Northern Star Resources Ltd (ASX: NST) share price is up 58%
  • The Evolution Mining Ltd (ASX: EVN) share price is up 52%
  • The Gold Road Resources Ltd (ASX: GOR) share price is up 30%
  • The Newcrest Mining Ltd (ASX: NCM) share price is up 46%

ASX 200 gold stocks have received some heady tailwinds over the year amid a rising gold price.

One year ago, the yellow metal was trading for US$1,717 per ounce. Today that same ounce is worth US$1,978.

As you can see, that 12% rise in the gold price has delivered far more in share price gains for these big producers. That's because their costs remain fixed regardless of the price of the precious metal they dig from the ground. So, any gains in the gold price tend to go straight to the bottom line.

With that in mind…

Why ASX 200 gold stocks could keep shining bright into 2024

Forecasting a likely recession in the United States and subsequent easing from the Federal Reserve, JPMorgan Chase believes the gold price will enter record territory next year.

As The Australian Financial Review reports, the bank says that falling interest rates in the world's top economy, which it forecasts for the second quarter of 2024, will be a "significant driver" for bullion prices.

JP Morgan Chase has an average price target of US$2,175 per ounce for the fourth quarter of 2024. That's 10% above the current price, which would come as welcome news for ASX 200 gold stocks.

According to Greg Shearer, executive director of global commodities research:

We're in a very prime place where we think gold ownership and long allocation to gold and silver is something that acts as both a late cycle diversifier and something that will perform as we look to the next sort of 12, 18 months.

Shearer also pointed to recent surges in central bank bullion purchases amid rising geopolitical tensions as likely to continue supporting the gold price, and by connection ASX 200 gold stocks.

"There's an eagerness here to really buy in and diversify allocation away from currencies," he said.

Indeed, central banks added 228 tonnes of bullion to their reserves in the first quarter of 2023, representing a new record.

"Against the backdrop of turmoil in the banking sector, ongoing geopolitical tensions and a challenging economic environment, gold's role as a safe haven asset has come to the fore," said Louise Street, senior markets analyst at the World Gold Council, said earlier this year.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Gold

Woman holding gold bar and cheering.
Gold

Why the Newmont share price represents 'an attractive opportunity' right now

Today is an excellent day to buy Newmont shares, according to this leading fund manager.

Read more »

a man wearing a gold shirt smiles widely as he is engulfed in a shower of gold confetti falling from the sky. representing a new gold discovery by ASX mining share OzAurum Resources
Gold

Evolution Mining share price rockets 10% on strong quarterly update

This mining stock is glittering like gold on the market today.

Read more »

Gold bars on top of gold coins.
Gold

What's happening with the gold price as Middle East tensions flare?

After smashing into new record highs, can the gold price continue to climb?

Read more »

A man clenches his fists in excitement as gold coins fall from the sky.
Gold

'Another game-changer': Why this ASX gold stock is jumping 13% today

It has been another golden day for shareholders of this company.

Read more »

plummeting gold share price
Gold

Why is this ASX 200 gold stock crashing 7% on Monday?

Investors are bidding down this ASX 200 gold miner today following confirmation of media rumours.

Read more »

rising gold share price with with an arrow and word gold
Gold

Gold price smashes record highs again adding more shine to ASX 200 gold stocks

The gold price has set another new all-time high in great news for ASX gold miners.

Read more »

A man wearing 70s clothing and a big gold chain around his neck looks a little bit unsure.
Gold

Is it a bad idea to buy ASX gold ETFs at all-time highs?

Some trains shouldn't be caught after they leave the station...

Read more »

Calculator and gold bars on Australian dollars, symbolising dividends.
Gold

Northern Star share price tumbles on difficult quarter

This gold miner's shares are on the slide on Thursday. But why?

Read more »