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Why the De Grey Mining (ASXEG) share price is shooting 12% higher today

This gold shares is glittering today…


James Mickleboro❯
Published March 7, 11:44 am AEDT
DEG

Image source: Getty Images
Key points

• The De Grey share price is glittering on Monday.
• This follows a strong rise in the gold price on Friday and again this morning.
• The gold explorer's addition to the ASX 200 is also likely to be boosting its shares.

The De Grey Mining Limited (ASX: DEG) share price has been a very strong performer on Monday.
In morning trade, the gold explorer’s shares are up 12% to $1.30.
This latest gain means the De Grey share price is now up almost 50% over the last 12 months.
Why is the De Grey share price surging higher?

There have been a couple of catalysts for the rise in the De Grey share price on Monday.
The first is a solid rise in the gold price on Friday night and then again on Monday morning amid increasing demand for safe haven assets.
According to CNBC, during Asian trade this morning, the spot gold price has risen a further 1.3% to US$1,992.4 an ounce. This means the gold price is now up approximately 11% since the start of the year.
What else is boosting its shares?

Also giving the De Grey share price a boost today is news that the gold explorer will be added to the illustrious S&P/ASX 200 Index (ASX: XJO) later this month. It is one of four shares that will be added to the index on 22 March following the quarterly rebalance.
This can be a positive for a share price for a couple of reasons. One is that index funds that track the ASX 200 will need to buy these shares in order to reflect the changes.
In addition, most fund managers have strict mandates on the shares that they’re allowed to invest their clients’ money into. A popular one is that they only buy shares from certain indices like the ASX 200.
This means that De Grey’s addition to the index could have allowed some fund managers that have been wanting to invest in the company’s shares to do so today.