Why these 3 ASX 200 gold shares are racing higher today

It’s been a good day on the ASX 200 for some of Australia’s top gold shares. We look at what’s helping drive investor interest.
The post Why these 3 ASX 200 gold shares are racing higher today appeared first on The Motley Fool Australia. –

asx share price soaring represented by golden metal hawk flying high

S&P/ASX 200 Index (ASX: XJO) gold shares are in the spotlight today.

Three of the top ASX 200 gold shares are all racing higher in late afternoon trading.

The Newcrest Mining Ltd (ASX: NCM) share price is up 3.7% to $27.69 per share.

The Northern Star Resources Ltd (ASX: NST) share price has gained 2.9% in intraday trading, currently at $11.21 per share.

And the Evolution Mining Ltd (ASX: EVN) share price leads the golden charge, with Evolution shares up 3.9% to %4.59 per share.

What’s supporting ASX 200 gold shares?

ASX 200 gold shares are broadly enjoying a lift in the gold price.

Analysts are crediting the yellow metal’s rise with a fall in the US dollar and declining US bond yields. Adding to that, growing angst over possible rising inflation may be spurring investors to seek out the classic inflation hedge.

An ounce of gold is currently worth US$1,763.48 (AU$2,281.35). That’s the highest level since 25 February.

Now, that’s well below the record high levels of just over US$2,065 per ounce, reached on 6 August last year. But it’s still up 4.6% since 31 March.

In that same time, Evolution Mining shares have gained 10.8%, while the Newcrest share price is up 13.5% since 31 March, and the Northern Star share price has soared 17.8%.

As my Foolish colleague, James Mickleboro, pointed out earlier today, Northern Star and Newscrest may be enjoying an extra boost thanks to a note from Goldman Sachs. The broker has upgraded both ASX 200 gold shares from neutral to a buy.

Why are the miners’ shares outpacing the price gains of gold?

If you look at the share price gains above again, you’ll see that the ASX 200 gold miners have seen their shares increase by more than double the gains in the gold price. In the case of Northern Star Resources, shares are up 286% the price of gold since 31 March.

Now that won’t always be the case. Other factors certainly impact on gold miners’ share prices. These include safety records, weather, drilling results that impact their gold estimates, and their costs to dig the yellow metal from the ground and bring it to market… among others.

But the price of the precious metal they dig from the ground does tend to have an outsized impact on their share prices.

You may have heard it said that gold shares are leveraged to the price of gold.

That’s because a gold miner’s costs are mostly fixed, regardless of whether they’re receiving $1,000 per ounce for their product or $2,000. So when the price does rise, as it’s done over the past 2 weeks, almost all of that goes straight to the miner’s bottom line.

And to a rising share price.

Do these miners pay dividends too?

Although many investors buy shares in gold miners hoping for some big share price gains, all 3 of these ASX 200 gold shares pay dividends as well.

Newcrest Mining has a current market cap of $22.7 billion and trades on a price to earnings (P/E) ratio of 17.6 times. Newcrest pays an annual dividend yield of 1.58%.

Northern Star has a market cap of $13.0 billion and trades on a P/E ratio of 26.2 times. Northern Star pays a dividend yield of 1.70%.

The leading dividend payer among the 3 ASX 200 gold shares is Evolution Mining. Evolution has a market cap of $7.8 billion and trade on a P/E ratio of 20.5 times. Evolution pays an annual dividend yield of 3.49%.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

See The 5 Stocks

*Returns as of February 15th 2021

More reading

Motley Fool contributor Bernd Struben 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 Bruce Jackson.

The post Why these 3 ASX 200 gold shares are racing higher today appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!