3 Gold Stocks Set To Beat Earnings Estimates In Q3
Zacks Investment Research | Oct 28, 2019 10:32PM ET
Gold prices have gained 16.6% so far this year. The third quarter of 2019 was eventful for the gold mining sector. Uncertainty in the U.S-China trade front, geopolitical concerns between the United States and the Middle East put together with the Brexit mayhem have compelled investors to seek safe-haven investment options like gold. Further, the Fed cut rates twice during the quarter, which in turn provided a boost to gold prices. Notably, lower the interest rates, lesser will be the opportunity cost of holding non-yielding bullion, making gold an attractive option for investors holding other currencies. Gold prices also gained from contraction in the manufacturing sector.
Gold demand in India, a major consumer, is seasonally high during the second half of the year due to festival and wedding related buying activities. However, the record high gold prices might have thwarted demand in the July-September quarter. Further, two-thirds of India’s gold demand comes from rural areas, where jewelry is a traditional store of wealth. However, this year’s lower-than-average monsoon and hike in India’s import tax is likely to have dampened demand. Nevertheless, concerns of a global economic slowdown are likely to have fueled demand for the metal in the country.
Meanwhile, the gold-mining industry has to contend with escalating production costs including the cost of electricity, wages, water and materials and the third quarter was no exception to this trend. Consequently, the industry participants focus on improving sales volumes while being cost-effective at the same time. They also have to concentrate efforts on operating efficiently and lowering debt levels to maintain margins.
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