S&P/ASX 200 Index (ASX: XJO) gold stocks are back in the spotlight today as the price of the yellow metal again broke into new all-time high territory.
The gold price reached US$2,449.89 per ounce earlier today. It's retraced a touch since then, trading for US$2,412.69 per ounce at the time of writing.
Based on current levels, the gold price has now soared by 22.4% since this time last year, when that same ounce was worth US$1,971.86.
But the real rally in the gold price, and for ASX 200 gold stocks, kicked off in late February. The yellow metal began to rocket from US$2,034 per ounce on 28 February in a rally that's seen it gain 18.6% since then.
That price surge has helped drive the S&P/ASX All Ordinaries Gold Index (ASX: XGD) – which also contains some smaller gold miners outside of the ASX 200 – up a whopping 29.8% since 28 February.
That compares to a 2.4% gain posted by the ASX 200.
Here's how these top Aussie gold miners stack up compared to the Gold Index over this same period:
- Northern Star Resources Ltd (ASX: NST) shares are up 17.4%
- Newmont Corp (ASX: NEM) shares are up 43.9%
- De Grey Mining Ltd (ASX: DEG) shares are down 5.3%
- Ramelius Resources Ltd(ASX: RMS) shares are up 51.4%
- Gold Road Resources Ltd (ASX: GOR) shares are up 12.7%
- Evolution Mining Ltd (ASX: EVN) shares are up 39.8%
- Bellevue Gold Ltd (ASX: BGL) shares are up 38.7%
- Perseus Mining Ltd (ASX: PRU) shares are up 41.7%
Impressive, no?
Now, the majority of the ASX 200 gold stocks are in the red today. That may be partly due to gold's intraday price decline from the all-time highs.
And investors may be spooked by new revelations that the RBA came closer than we'd like to think to raising interest rates earlier this month.
Gold, which pays no yield itself, tends to perform better in low or falling rate environments. Though the yellow metal has proven resilient to the lingering higher rates across most of the developed world this year.
However, today's price dip may offer a decent entry point to buy more of these ASX 200 gold stocks if you believe, like I do, that the gold price rally has a way to run yet.
What's sending the gold price and ASX 200 gold stocks soaring?
The gold price and ASX 200 gold stocks have been receiving tailwinds from a number of fronts.
Those include gold's haven status in times of geopolitical uncertainty, the prospect of lower global interest rates down the road, and robust central bank buying.
China's central bank has had a particularly voracious appetite for bullion in recent years.
According to the Stanford Institute for Economic Policy Research (cited by Bloomberg), the share of gold in the People's Bank of China's total currency reserves has increased from less than 2% in 2015 to 4.3% last year. The nation's US bond holdings have fallen from 44% to 30% of total currency reserves over that same period.
Commenting on this trend, Gita Gopinath, deputy managing director of the International Monetary Fund, recently said:
[This] suggests that gold purchases by some central banks may have been driven by concerns about sanctions risk. This is consistent with a recent IMF study confirming that FX reserve managers tend to increase gold holdings to hedge against economic uncertainty and geopolitical including sanctions risk.
Regardless of their motivations, central bank buying looks to be helping drive the gold price to a series of new record highs.
If this trend continues, it should come as good news for shareholders in ASX 200 gold stocks.
