Why ASX 200 gold shares could see the yellow metal hit new record highs: expert

S&P/ASX 200 Index (ASX: XJO) gold shares have enjoyed some heady tailwinds amid the banking crisis gripping the United States and Europe.

Angst over potential bank failures has seen gold retain its shine as investors turn to the yellow metal for its classic haven status.

Any rise in the gold price is, as you’d expect, good news for the big Aussie gold miners.

And gold edged higher again on Tuesday, closing the day trading for US$1,984 per ounce, up from US$1,977 per ounce on Monday.

Despite that 0.4% increase, the Northern Star Resources Ltd (ASX: NST) share price closed the day down 1.52%.

However, rival ASX 200 gold share Newcrest Mining Ltd (ASX: NCM) finished up 0.62%, while the Evolution Mining Ltd (ASX: EVN) share price gained 2.1%.

Following Monday’s meteoric share price gains, these three ASX 200 gold shares are all well into the green over the past five trading days. Here’s how they’ve performed since this time last week (as at yesterday’s close):

• Northern Star shares are up 6.7%
• Newcrest Mining shares have gained 5.4%
• Evolution Mining shares are up 6.3%

But there could be more good news to come for ASX 200 gold shares.

More tailwinds ahead for ASX 200 gold shares?

Bullion traded at all-time highs of $2,075 per ounce in August 2020 during the early months of the global pandemic as investors sought a safe place to park their wealth. That record level offered ASX 200 gold shares some outsized profits at the time.

Gold briefly touched US$2,000 per ounce on Monday amid ongoing concerns over the Swiss government-backed deal for UBS to takeover Credit Suisse.

Some smaller US banks also remain vulnerable. That includes First Republic Bank (NYSE: FRC), which closed down 47% on Monday.

Now global central banks are stepping in to provide liquidity for their stressed banks. And analysts are now expecting fewer rate rises from those same core central banks.

This combination could well see gold set new all-time highs, according to Sprott Inc CEO Whitney George (courtesy of Bloomberg).

“I certainly think we’re on our way to new highs,” George said. He noted that following market downturns, “The minute liquidity is restored back into the global market, gold seems to always be the first thing to recover, and then often hits new highs.”

Even just edging into new record territory would mean a 5% increase from the current price of bullion, which would be welcome news for ASX 200 gold shares.

The post Why ASX 200 gold shares could see the yellow metal hit new record highs: expert appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• 5 things to watch on the ASX 200 on Wednesday
• Why A2 Milk, Accent, Northern Star, and Select Harvests shares are dropping
• ‘Increasing demand’: Expert picks 2 ASX 200 mining shares to buy (not BHP)
• 5 things to watch on the ASX 200 on Tuesday
• Here are the top 10 ASX 200 shares today

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.

from The Motley Fool Australia https://ift.tt/OnSy60m