With the gold price hitting all-time highs of US$2,135 per ounce over the weekend, S&P/ASX 200 Index (ASX: XJO) gold shares started the week with a bang.
By market close on Monday the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller miners outside of ASX 200 gold shares – had tacked on 3.2%.
But as the gold price retraced over the four past days from those all-time highs, so too has investor exuberance for gold stocks.
At time of writing, the yellow metal is trading for US$2,028 per ounce.
Now, that's still within a whisker of the previous record of US$2,075 per ounce, notched on 7 August 2020. But with the gold price down 5% from this past weekend's new records, the All Ords Gold Index has fallen 5.2% since Monday's close.
Still, I'm not breaking out my tiny violin for longer-term investors in ASX 200 gold stocks.
Here's how these five big gold producers have performed since this time last year, when the gold price stood at US$1,839 per ounce:
- Northern Star Resources Ltd (ASX: NST) shares have gained 13%
- Ramelius Resources Ltd (ASX: RMS) shares have gained 61%
- Gold Road Resources Ltd (ASX: GOR) shares have gained 9%
- Evolution Mining Ltd (ASX: EVN) shares have gained 24%
- Bellevue Gold Ltd (ASX: BGL) shares have gained 55%
To put that in context, the ASX 200 is essentially flat over this same period.
With that in mind, what can investors expect from bullion in the year ahead?
What's next for the gold price in 2024?
The World Gold Council's (WGC) 2024 outlook report indicates investors can expect a stable global gold market in 2024 "at the least".
The report noted that there's also potential for the gold price to "surprise to the upside next year". A surprise that would offer additional tailwinds for ASX 200 gold shares.
The WGC pointed to several factors likely to support gold in 2024.
Among those, are ongoing geopolitical tensions. Those include major elections taking place in 2024, such as the tumultuous presidential battle shaping up in the United States between Joe Biden and Donald Trump.
Continued central bank buying is also likely to support the yellow metal, countering any weakening demand in the case of a soft landing for the US economy.
If the US does manage that soft landing, the WGC says the outlook for the gold price in 2024 is flat "with upside potential".
In case of a hard landing or recession in the world's top economy, the report notes that higher interest rates may spook markets, presenting a "strong case for strategic gold allocations".
A third, and less likely, scenario for 2024 would see inflation and growth tick back up, which "could result in a flat to slightly weaker than average performance" for the gold price in 2024. That scenario would also throw up some headwinds for ASX 200 gold shares.
"The market consensus is set on a soft landing, and dovish commentary from the Fed has helped drive up gold prices to record highs this week," Juan Carlos Artigas, global head of research at the WGC said.
Taking into account all relevant factors for 2024, including event risk and sustained strong central bank demand, we expect conditions to be in place that support a stable gold market at the least and even a possible surprise to the upside.