The St Barbara Ltd (ASX: SBM) share price and Saracen Mineral Holdings Limited (ASX: SAR) share price were two of the biggest gainers in the ASX200 yesterday, closing up 7.14% and 6.80%, respectively.
Fellow gold miner Regis Resources Limited (ASX: RRL) also joined in on the fun, closing 5.31% higher at $5.16 per share. In early trade this morning, the Regis Resources share price has lifted 1.94% to $5.26.
But here's why I think the Regis Resources share price has the capacity to charge even higher in today's trade.
Gold Prices are sustained above $1300/oz
Gold prices have risen to $1311.97 per ounce overnight as global risk-off sentiment continues to build. The precious metal has traditionally been seen as a defensive asset – one which investors flock to in a bid to hedge against inflation or maintain capital stability.
I expect to see further turbulence as we enter the Australian reporting season in February and approach an uncertain Brexit scenario. In my view, this should keep gold prices high and profit margins sustained for major miners like Regis.
Strong Financial Position
Based on the company's latest corporate update, Regis remains in a strong financial position with zero debt on its balance sheet. Cash flow from operations (CFO) remains at a tidy $300.8 million which gives the company the ability to maintain its fully-franked 3.27% dividend yield for investors.
Momentum
The Regis share price has risen 8.64% so far this year and once the momentum train starts rolling, it can be very hard to stop. The stock is trading at a P/E ratio of 14.92 which is slightly under that of the ASX200 (16.15) and I think it may have further upside potential in coming months.
Foolish Takeaway
The technical environment for gold miners remains supportive with further equity volatility set to sustain the demand-side of the equation. However, for those looking for further options within the metals and mining sector, I like graphite miner Syrah Resources Ltd (ASX: SYR), despite its share price seeing a sharp decline after releasing a long-awaited update on its commercial operations earlier this morning.
