With the gold price at sky-high levels, it has been a great time to have some exposure to the gold sector.

But don't worry if you are late to the party. That's because Bell Potter still sees potential for some market-beating returns from one ASX 200 gold share.

Which is ASX 200 gold share?

The gold miner it is tipping as a buy this morning is Regis Resources Ltd (ASX: RRL).

On Thursday, Regis Resources released an update and revealed first quarter production of 94,500 ounces from its Duketon and Tropicana operations.

This means that it is on track to achieve its FY 2025 production guidance of 350,000 ounces to 380,000 ounces.

In addition, the ASX 200 gold share revealed that its cash balance continues to grow thanks to the strong gold price and its unhedged book. Regis Resources reported a cash and bullion balance of $380 million, which represents a build of $85 million from the prior quarter.

While Bell Potter acknowledges that its production was a touch short of its estimates, it was impressed with its cash generation and believes it could drive a re-rating of its shares if it continues. The broker said:

The key takeaway from this update is the cash build per ounce over the quarter, which was A$899/oz of gold produced and a second consecutive record for RRL. (June quarter 2024 A$836/oz net of $20m tax refund). This reflects RRL's full, unhedged exposure to all-time high A$ gold prices and we expect this metric to be among the best in the sector for the September quarter.

Importantly, this demonstrates RRL's gold price leverage, a key attraction for the market which has been rewarding cash generative gold producers with premium ratings relative to peers. If RRL is able to maintain this performance, we expect its re-rating to gain momentum. With this update we also lift our gold price forecasts, including an 11% increase in FY26 for a 31% increase in EBITDA and 23% increase in our target price.

Time to buy

Bell Potter has responded to the update by retaining its buy rating and lifting its price target to $2.48 (from $2.02). Based on its current share price of $2.13, this implies potential upside of 16% for investors over the next 12 months. It concludes:

Our NPV-based valuation lifts by 23% to $2.48/sh, demonstrating RRL's leverage to the gold price. RRL is a multi-mine gold producer with an allAustralian asset portfolio. We forecast free cash flow growth in FY25 and for RRL to benefit from a rising gold price. We retain our Buy recommendation.