Gold Stocks' Q2 Earnings Lined Up For Aug 3: GORO, IAG, SAND
Zacks Investment Research | Aug 02, 2016 07:27AM ET
This year, gold has been the best performing asset, trumping major equity indices, investment grade and high-yield bonds and commodity indices. The yellow metal has gained 26% year to date, with current prices reigning above the $1,300 mark.
The rally in gold prices was primarily fuelled by the slowdown in China. Further, volatile equity markets and introduction of negative interest rates by several central banks (including Japan) have spurred safe-haven demand for gold. Gold prices also benefited from strong investment inflows. This safe-haven asset has gained both pre- and post-Brexit chaos. The U.S. Federal Reserve’s dovish stance has been another major factor that has helped gold retain its shine. A delay in raising interest rates elevates demand for gold, which produces no income, but relies on price appreciation to attract investors.
The gold mining industry is grouped under the Basic Material sector – one of the 16 broad Zacks sectors. 65% of the companies in this sector that have reported so far put up a 5.9% fall in earnings on the scoreboard. Considering the companies that are yet to report, the sector’s earnings are expected to drop 10.6% in the quarter.
However, it is not the only sector to suffer an earnings decline this quarter. Earnings growth is anticipated to be in the negative territory for 9 of the 16 Zacks sectors, with Energy being the biggest laggard. Looking at the projections for the quarter, total S&P 500 earnings are expected to be down 3.4% on a 0.4% dip in revenues. It seems the quarter is on track to be the fifth quarter in a row to suffer an earnings decline. (Read more: Zacks Investment Research
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