Here's why the Northern Star (ASX:NST) share price had such a stellar day

Gold was glittering today…

| More on:
A woman in a business suit holds a large gold bar in both hands with a gold arrow tracking upwards.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The ASX 200 had a dreadful day of trading today
  • Yet ASX 200 gold miners like Northern Star boomed
  • But why might a gold miner be in demand during a market tumble?

There is no denying that the S&P/ASX 200 Index (ASX: XJO) had a pretty dreadful day of trading on the ASX boards this Tuesday. The ASX 200 ended up finishing the day down 1% after falling as hard as 1.7% earlier in the session. So that makes the Northern Star Resources Ltd (ASX: NST) share price's performance even more remarkable.

This ASX 200 gold miner ended up having one of the best days it has had for a while today. The company finished the day up a very pleasing 4.63% at $10.16 a share after opening at $9.85 this morning.

So what could be behind this marked outperformance for Northern Star?

Well, to put aside any obvious reasons, there has been no major news or announcements out of the gold miner today. Or indeed this week. Thus, we can only speculate.

But big moves from a mining company are almost always linked to news or price movements of the major commodities they mine. So let's look at what gold is doing.

Gold mining share Northern Star glitters

Looking at the gold price, we can see it's actually near its 52-week high. The yellow metal is currently trading slightly over US$1,900 an ounce at US$1,912. It was only at the start of the month that gold was under US$1,800. So we've seen a significant appreciation in gold prices over a relatively short time frame.

This can probably be explained by the ongoing Russia-Ukraine crisis that has been dominating world politics recently. Gold is regarded as a 'safe haven' asset by many investors. This is due to a number of reasons, including gold's physical nature and its history as a monetary base.

During times of economic or geopolitical tension, we often see gold rise in value as investors bail out of 'risky' assets like shares and into gold and cash. The Ukraine Crisis is a perfect example of global geopolitical stress. So this might be why gold has been on the rise over the past few weeks. My Fool colleague Bernd also looked into gold's role as a safe haven earlier today.

So we have a rising gold price and increasing uncertainty across the global economy. As such, we can argue that this is why we have seen the Northern Star share price receive so much love during today's trading session. We saw this playing out across other gold mining shares like Newcrest Mining Ltd (ASX: NCM) today too.

It's not just today though. Northern Star shares are now up almost 8% in 2022 so far. As well as by more than 22.5% in February alone.

At the current Northern Star share price, this ASX 200 gold miner has a market capitalisation of $11.88 billion, with a dividend yield of 1.87%.

Motley Fool contributor Sebastian Bowen owns Newcrest Mining Limited. 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 Bruce Jackson.

More on Gold

Rising gold share price represented by a green arrow on piles of gold block.
Share Gainers

2 ASX All Ords stocks that would already have more than doubled your money this year

These ASX All Ords stocks have gained 126% and 145% year to date. But how?

Read more »

A woman holds a gold bar in one hand and puts her other hand to her forehead with an apprehensive and concerned expression on her face after watching the Ramelius share price fall today
Gold

Guess which ASX 200 gold stock is sinking 7% on five-year guidance update

Let's see what this gold miner has announced this morning.

Read more »

A man analyses stockmarket graph on his computer.
Gold

Up 132% in a year, why is the Evolution Mining share price gaining again today?

Investors are piling into Evolution Mining shares on Friday. But why?

Read more »

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Gold

ASX 300 gold stock crashes 8% on guidance update

This gold miner is having a tough session on Friday. But why?

Read more »

View of a mine site.
Gold

Up 70% in a year, why this fund manager is calling time on this soaring ASX 200 gold stock

A leading investment expert foresees headwinds for this surging ASX 200 gold miner.

Read more »

A man standing in a red rock mine is covered by a sheet of gold blowing in the wind.
Gold

Up 305% in a year, what's got investors so excited about this ASX gold share?

'First gold' is imminent...

Read more »

Rising gold share price represented by a green arrow on piles of gold block.
Gold

Why are ASX 200 gold stocks going gangbusters today?

Investors are piling into the ASX 200 gold miners today. But why?

Read more »

A man wearing glasses and a white t-shirt pumps his fists in the air looking excited and happy about the rising OBX share price
Gold

Guess which ASX stock is rocketing 75% on big news

Let's find out why this shares is starting the week with a bang.

Read more »