ASX 200 gold shares are booming on Monday. Here's why they could keep shining bright

Today's strong rally among ASX 200 gold stocks may be just the beginning, according to this expert forecast.

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price

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S&P/ASX 200 Index (ASX: XJO) gold shares are rocketing higher today.

In afternoon trade on Monday, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold stocks outside of the ASX 200 – is up 4.5%.

Here's how these leading ASX 200 gold shares are tracking today:

  • Northern Star Resources Ltd (ASX: NST) shares are up 5.8%
  • Newmont Corp (ASX: NEM) shares are up 1.2%
  • De Grey Mining Ltd (ASX: DEG) shares are up 6.4%
  • Ramelius Resources Ltd (ASX: RMS) shares are up 5.5%
  • Gold Road Resources Ltd (ASX: GOR) shares are up 7.7%
  • Evolution Mining Ltd (ASX: EVN) shares are up 6.1%%
  • Bellevue Gold Ltd (ASX: BGL) shares are up 3.6%

For some context, the ASX 200 has given back its earlier intraday gains (which saw the benchmark index hit new record territory) to be trading just about flat at this same time.

Why are gold miners smashing the benchmark on Monday?

ASX 200 gold shares are enjoying a stellar run today, with bullion hitting US$2,086 per ounce (AU$3,192/oz).

That's up from US$2,044 per ounce on 29 February. And it sees the gold price up almost 15% from the recent lows of US$1,820 per ounce on 5 October.

A range of factors have conspired to help boost the gold price.

Those include near-record levels of central bank buying, bullion's safe haven status in times of uncertainty, and the outlook for lower global interest rates as inflation across most of the developed world continues to come off the boil.

And with these factors expected to continue, the outlook for ASX 200 gold shares in 2024 is looking bright.

Can ASX 200 gold shares outshine the market in 2024?

While the performance of individual miners is impacted by numerous factors like mining costs, production levels and hedging commitments, the gold price has a decisive impact on the profitability of ASX 200 gold shares.

On that front, TD Securities forecasts that the yellow metal could gain another 10% from current levels to reach US$2,300 per ounce.

According to the investment bank (quoted by The Australian Financial Review):

It is hoped that the combination of lower [US Treasury] yields, which are likely to attract discretionary investors into futures and ETFs, along with strong physical markets in China and robust central bank buying, will move gold to new highs.

Indeed, we believe that the yellow metal is set to move into $US2300+ territory, once there is more certainty surrounding the timing and magnitude of the pending Fed pivot.

TD Securities' analysts cautioned that its price target of US$2,300 per ounce may take some time to play out yet.

Citing February's 2.6% contraction in the US Institute for Supply Management manufacturing index, the analysts said, "There will still need to be more evidence that the economy is slowing sufficiently to facilitate a steady drop in inflation before this rally becomes sustainable and moves to our target."

Looking ahead to the pending release this week of February's US ISM services, payrolls, wages and unemployment data, TD Securities said:

We suspect that data will be weaker, but not so poor as to drive yields much lower. As such, the market will have to wait for our $US2300+ trading target to manifest a while longer.

If bullion does rally to new record highs of US$2,300 per ounce on the back of falling yields, ASX 200 gold shares could deliver more strong outperformance ahead.

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.

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