The Zacks Analyst Blog Highlights: Kinross Gold, Franco-Nevada, Barrick Gold, New Gold And Newmont Goldcorp
Zacks Investment Research | Jul 18, 2019 11:07PM ET
For Immediate Release
Chicago, IL – July 19, 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: Kinross Gold Corp. (NYSE:KGC) , Franco-Nevada Corp. (TSX:FNV) , Barrick Gold Corp. (NYSE:GOLD) , New Gold Inc. (NYSE:NGD) and Newmont Goldcorp Corp. (NYSE:NEM) .
Here are highlights from Thursday’s Analyst Blog:
5 Must-Buy Gold Stocks Ahead of Interest Rate Cut
Gold price, which remained range bound in the first five months of this year, skyrocketed in June driven by a dovish Fed and easy monetary stance by other major central banks, trade-related conflict across the world, and fears of a global economic slowdown. A recent comment by IMF on the U.S. dollar further fueled gold price.
Lower interest rates decreased the opportunity cost of holding nonyielding bullion, making gold cheaper for investors holding other currencies. 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.
Fed Signals an Impending Rate Cut
On Jul 10, in a testimony to the House Financial Services Committee, Fed chair Jerome Powell said that the United States is suffering from a bout of uncertainty caused by trade tensions and weak global growth.
Powell reiterated Fed’s commitment to act as appropriate to sustain U.S. economic expansion, providing a clear message for a rate cut possibly in the upcoming FOMC meeting scheduled on Jul 30-31.
Meanwhile, on Jul 16, Powell again repeated his pledge to “act as appropriate” to keep the U.S. economic expansion going in a speech delivered in Paris. Moreover, Fed’s latest Beige Book, released on Jul 17, also reaffirmed that a rate cut is likely to protect the U.S. economy from a lingering trade dispute with China and might boost inflation, which is muted since the beginning of 2019.
U.S. Dollar Price Declines on IMF Comment
After Powell’s Congressional testimony, the ICE (NYSE:ICE) U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six major currencies, fell 0.4%. Expectation of a low interest rate made U.S. dollar less attractive to investors.
Moreover, on Jul 17, the IMF remarked that the U.S. dollar is currently overvalued by 6% to 12%, based on near-term economic fundamentals. IMF’s comment is in line with President Trump, who is frequently blaming dollar strength for the currency’s loss of competitiveness in the international market. Consequently, on Jul 17, U.S. dollar price fell 0.2% to close at 97.07.
Treasury Yields Tumble as Trade Tensions Intensify
On Jul 16, President Trump said that a trade deal between the United States and China is a long way off. In addition, he also cast doubts on whether a deal will at all be possible or not. Trump once again threatened to impose a 25% tariff on another $325 billion of Chinese goods. Meanwhile, China has also toughened its stand on trade negotiations after adding commerce minister, Zhong Shan, known as a hard bargainer, to its negotiation team.
Consequently, yield on 10-year Treasury Note declined 0.04% to 2.06% on Jul 17, its biggest single-day drop since May 31, as investors increasingly opted for safe haven government bonds instead of risky equities.
Gold Prices Surge
Fed’s rate cut hope, IMF’s comment on U.S. dollar and jump in government yields due to fears of global slowdown had a combined positive effect on gold price. Consequently, on Jul 17, spot gold price was up 0.3% to 1,4100.06 per ounce. Moreover, U.S. gold futures for August delivery jumped 0.9% to $1,423.60 per ounce, marking the highest finish for any active contract since May 14, 2013.
Our Top Picks
At this stage, it will be prudent to invest in gold stocks that are likely to beat earnings estimates in the second quarter. We have narrowed down our search to five gold stocks which surged in the past three months and still have upside left. Each of these stocks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy) and has a positive Zacks Investment Research
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