The Zacks Analyst Blog Highlights: AngloGold, Rio Tinto, SSR, Franco-Nevada And BHP
Zacks Investment Research | Jun 25, 2019 09:10PM ET
For Immediate Release
Chicago, IL –June 26, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: AngloGold Ashanti Ltd. (NYSE:AU) , Rio Tinto (LON:RIO) Group (NYSE:RIO) , SSR Mining Inc. (NASDAQ:SSRM) , Franco-Nevada Corp. (TSX:FNV) and BHP Group plc (NYSE:BBL) .
Here are highlights from Tuesday’s Analyst Blog:
Gold Prices Highest in Nearly 6 Years: 5 Picks
Gold price skyrocketed after remaining range bound in the first five months of this year. The rally was primarily driven by three macro factors --- Fed’s signal of a rate cut possibly next month, geopolitical tension in Iran and an impending global economic slowdown.
Moreover, if the upcoming meeting between President Donald Trump and his Chinese counterpart Xi Jinping turns out fruitless, gold price would soar further. Buying pressure on gold is likely to remain firm as investors will focus on precious metals as a store of wealth and hedge against market turmoil.
Gold Price Hits Record High
On Jun 24, the gold futures for August delivery gained more than 1% to close at 1,418.20 per ounce after touching an intraday high of 1,424.90 per ounce, its highest since Aug 28, 2013. Month to date, gold price is up more than 6.5% after gaining 1.6% in May. If this trend continues, it will be the best back-to-back monthly gain for the yellow metal since it gained more than 8% in the January-February 2017 period.
Year to date, gold price has advanced more than 9%, marking its best performance so far this year, after posting a record gain of 13.7% in 2017. Several industry researchers have estimated that gold price could hit 1,440 per ounce in 2019 if momentum remains strong.
Fed Signals Rate Cut
On Jun 19, in his speech following the FOMC meeting, Fed Chair Jerome Powell said that the benchmark lending rate was kept intact at 2.25-2.5%. However, the central bank said that the adoption of a more accommodative policy is gaining ground as some economic data raised concerns about U.S. and global growth.
Notably, out of the 17 voting members of the Fed, a strong bunch of eight is expecting a rate cut this year. Fed’s statement boosted investor confidence. Per CME FedWatch, traders are assigning 100% probability to a rate cut of at least 25 basis points in July.
Since Jun 19, the U.S. dollar price index has declined 1.6% while gold futures have rallied 5.6%, helping the yellow metal to break a key resistance at $1,360 - $1,365 per ounce.
Escalation of Geopolitical Tension in Iran
Geopolitical conflict in Iran intensified on Jun 13 when two oil tankers were set on fire in the Strait of Hormuz, for which the United States blamed Tehran. On Jun 20, the Revolutionary Guard of Iran claimed that it shot down a U.S. drone near the Strait of Hormuz. Iran alleged that the drone had entered its sky, which the U.S. military claimed as international airspace.
On Jun 24, President Trump signed an executive order imposing tough new sanctions on Iran. The new sanctions will deny Iran’s supreme leader Ayatollah Ali Khamenei and his office to access key financial resources. Notably, Iran is already facing U.S. sanctions regarding crude oil exports after the Trump administration withdrew from the Iran Nuclear Agreement of 2015.
Tepid Global Economic Data
In the United States, non-farm job addition in May came in at just 75,000. Moreover, total job addition in April and March was reduced by 75,000. U.S. manufacturing is suffering due to lack of global demand. The ISM Manufacturing Index for May came in at 52.1, the lowest level since October 2016.
China’s official manufacturing PMI for May slipped to 49.4, from April’s reading of 50.1. PMI readings below 50 signal contraction in the Chinese manufacturing sector. The National Bureau of Statistics of China reported that value-added industrial output rose 5.0% in May compared with 5.4% in April. This was the lowest growth rate in 17 years.
The Ifo business-climate index for Germany fell to 97.4 points in June, the lowest level since November 2014. The reading for May was 97.9. Companies' expectations index fell to 94.2 points in June from 95.2 points in May.
Our Top Picks
At this stage, it will be prudent to invest in gold stocks with strong growth potential. We have narrowed down our search to five such stocks, each of which carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see Zacks Investment Research
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.