The gold price, as you're likely aware, has been on a tear over the past year, much to the delight of shareholders in S&P/ASX 200 Index (ASX: XJO) gold stocks.
What kind of tear are we talking about?
Well, on 1 October 2023, you could have bought an ounce of gold for US$1,828.03.
Today, that same ounce of gold is worth US$2,635.03, just off last week's record highs of US$2,685 per ounce.
That's a gain of just over 44% for bullion.
As you'd expect, the soaring gold price has been a boon for ASX 200 mining stocks focused on digging the yellow metal from the ground.
Here's how these top ASX 200 gold miners have performed since 2 October 2023:
- Northern Star Resources Ltd (ASX: NST) shares are up 52%
- Newmont Corp (ASX: NEM) shares are up 31%*
- Ramelius Resources Ltd (ASX: RMS) shares are up 53%
- Evolution Mining Ltd (ASX: EVN) shares are up 41%
- Perseus Mining Ltd (ASX: PRU) shares are up 57%
(*Newmont commenced trading on the ASX on 27 October 2023 after acquiring Newcrest Mining.)
For some broader context, the ASX 200 is up 17% over this same period, while the S&P/ASX All Ordinaries Gold Index (ASX: XGD) is up 37%.
Numerous company-specific factors will impact how these ASX 200 miners fare in the year ahead. These include how they're managed, weather conditions, labour demands, mining accidents, hedging commitments, and more.
But clearly, the gold price will play a crucial factor.
With that in mind, we turn to the latest forecast from Goldman Sachs.
ASX 200 mining stocks eyeing potential soaring gold price
The gold price and ASX 200 gold miners have gotten a big boost over the past year on three fronts.
First, gold serves as a classic haven asset and tends to perform well in times of geopolitical uncertainty and tensions. And the past year has presented investors with plenty of both.
Second, bullion has been supported by near-record levels of central bank buying.
And third, the yellow metal has gotten a boost as major central banks, including the US Federal Reserve, finally begin to dial back interest rates. Gold pays no yield itself and usually performs better in low or falling rate environments. It's also priced in US dollars, so can benefit from a weaker greenback amid ongoing Fed easing.
Looking ahead into 2025, Goldman Sachs thinks it's these second two factors that will drive the gold price higher, with its analysts boosting their price forecast from US$2,700 per ounce to US$2,900 per ounce.
According to the analysts (courtesy of The Australian Financial Review):
First, our economists now look for faster declines in short-term interest rates in the West and China, and we recently showed that the gold market doesn't fully price in the rates boost to Western ETF holdings backed by physical gold yet, which tends to be gradual.
Second, our new nowcast shows that EM [emerging market] central bank purchases on the London over-the-counter (OTC) market continue to fundamentally drive the rally since 2022, and we believe that these purchases will remain structurally elevated.
If Goldman Sachs has this right, we can expect to see the gold price leap another 10% in 2025.
And that should offer some ongoing tailwinds for ASX 200 mining stocks like Northern Star, Newmont, Evolution Mining, Perseus and Ramelius Resources.
