Bet On These 3 Miners To Strike Gold This Earnings Season
Zacks Investment Research | Jul 25, 2017 08:01AM ET
In the first half of 2017, gold prices have gained around 8%, continuing the momentum of 8.5% annual gain in 2016. Meanwhile, the U.S Dollar has slipped 6.4% in the same time frame, its worst patch in six years. It is a well-known fact that gold and the US dollar usually have an inverse relationship. While the Fed’s rate hike impacted gold’s run, the weaker US dollar and other geopolitical concerns helped boost its safe haven demand. Also China and India witnessed renewed physical gold demand this year, after observing a lackluster demand last year due to economy-specific reasons.
Recently, the International Monetary Fund (MF) trimmed forecast for the US economy from 2.3% to 2.1% for 2017 due to policy uncertainty. A slower-than-expected growth for the US economy would be positive for gold.
Gold prices will get support from retail demand for gold in the second half of the year, which is seasonally strong for India and China due to festival and wedding related buying activities. The World Gold Council anticipates demand from China to grow at least another 20% by 2017. Indian gold demand rose in the first half of 2017 as gold imports rose in June to its highest level in two years to $4.9 billion, benefiting from pent-up demand. Further, customers built up inventories before the implementation of the Goods & Services Tax (GST). Though the imposition of GST poses a short-term challenge, a more transparent economy, expectations of bumper crop following a good monsoon will boost gold demand consequently. The World Gold Council anticipates consumers to buy between 650 tons and 750 tons of gold during the year.
While demand will remain strong, supply of this precious metal has already attained peak levels as per reports. The combination of lower mined gold supply and higher demand could eventually help prices navigate north.
Performance So Far, Predictions for Q2
As per the Zacks classification, the gold mining industry comes under the broader Zacks Investment Research
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