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Gold Loses Some Luster: Stocks to Buy and Avoid Right Now
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After an extended rally on post-Brexit vote market jitters, gold has lost some steam this week with prices slipping to two-week lows yesterday. The yellow metal’s retreat is largely attributable to a rally in U.S. equities following the upbeat June employment report, a surge in global stock markets and reduced political uncertainty in the UK following the appointment of Theresa May as the Prime Minister.
Notwithstanding the pullback, the bull market for gold remains intact with prices of the metal are up roughly 25% year to date.
Will the Bull Market for Gold Continue?
After hitting a fresh two-year high earlier last week, gold prices closed lower last Friday due to better-than-expected U.S jobs reports for June. The U.S. economy created 287,000 jobs in June (the biggest gain in eight months), trouncing the consensus estimate of 175,000. The impressive employment numbers sparked a rally in U.S. stocks, stripping away some of the allure of safe havens including gold. Yet, gold still managed to wrap up the week with a sixth straight weekly gain.
Gold has been losing some of its shine this week. Prices of the metal slipped to their lowest level since Jul 1 yesterday following the Bank of England’s surprising move to keep its benchmark interest rates unchanged at 0.5%. Investors were expecting a rate cut in the wake of Brexit. Moreover, the quick appointment of Theresa May as the Prime Minister on Wednesday somewhat eased the political uncertainties in Britain. These factors triggered a rally in global equities and tarnished the investment demand for gold, leading to a slide in the metal’s prices.
Gold prices broke above the $1,300 per troy ounce level in June after Britain voted to leave the European Union (EU). The market-jolting move sparked as much as around 8% surge in the metal’s prices to trade at levels last seen in Jul 2014. The Brexit-induced chaos in the global markets spurred investors’ demand for safe havens, triggering a strong rally in gold. Gold prices have been also gaining support from growing expectations that central banks around the world would step up monetary stimulus to avert economic damages from Brexit.
The U.S. Federal Reserve’s dovish stance has been another major factor that has helped gold regain its shine. While the impressive June employment report have raised expectations for a rate hike, concerns about global economic growth and lingering economic and political uncertainties in a post-Brexit world are likely to prompt the Fed to hold off on raising interest rates for now. A delay in raising interest rates elevates demand for gold, which produces no income but relies on price appreciation to attract investors.
Gold’s momentum is not expected to fade anytime soon as intense market uncertainty brought forth by Brexit is likely to continue to drive investors’ appetite for safe-harbor assets. Moreover, with Brexit negotiations are yet to start, there is still a lot of risk in the market that are expected to support the metal’s prices in the coming days. Some analysts feel that gold prices could touch the $1,400 an ounce threshold in the near to medium term given the profound impact of Brexit on the global financial markets and macroeconomic uncertainties.
Gold Stocks to Avoid
Despite the momentum for bullion, there are certain stocks in the gold mining space that have failed to catch the rally and are better to shun right now. For that, we have screened sell-rated gold mining stocks that have either witnessed downward estimate revisions over the past few weeks or are expected to see a decline in earnings for the current year.
Asanko Gold Inc.
Headquartered in Vancouver, Canada, Asanko Gold engages in the exploration, development, and production of gold in Ghana. Asanko Gold currently carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the current fiscal has plunged 100% over the past 60 days.
Colorado-based Gold Resource is focused on production and pursuing development of select, high-grade gold and silver projects that feature low operation costs and produce high returns on capital. Gold Resource currently holds a Zacks Rank #4. Its earnings for the current year are expected to decline 50% year over year.
Vancouver-based NovaGold is a gold and copper company engaged in the exploration and development of mineral properties in Alaska and Western Canada. The stock currently sports a Zacks Rank #4. Over the past 60 days, the Zacks Consensus Estimate for the current year has widened from a loss of 8 cents per share to a loss of 10 cents.
Look for Potential Winners Instead
As the scenario for bullion remains favorable, we recommend investors to instead scoop up some top-quality gold mining stocks that boast solid growth prospects. Our selection is backed by a good Zacks Rank and positive estimate revisions.
Vancouver-based Sandstorm Gold concentrates on acquiring gold and other precious metal purchase agreements and royalties from companies that have advanced stage development projects or operating mines.
This Zacks Rank #1 (Strong Buy) stock has expected earnings growth of 150% for the current year. The Zacks Consensus Estimate for the current year has shot up around 233% over the last 60 days.
Vancouver-based New Gold is engaged in acquisition, exploration, development and operation of mineral properties and mainly explores for gold, silver and copper deposits.
The stock holds a Zacks Rank #1 and has expected earnings growth of 150% for the current year. Over the past 60 days, the Zacks Consensus Estimate for the current year has gone up from a loss of 1 cent to earnings of 1 cent.
Vancouver, Canada-based B2Gold explores and develops mineral properties in Nicaragua, the Philippines, Namibia, Burkina Faso and Chile. The company primarily explores for gold, silver and copper.
The stock holds a Zacks Rank #1 and has expected earnings growth of a staggering 900% for the current year. The Zacks Consensus Estimate for the current year has moved up 25% over the last 60 days.
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Gold Loses Some Luster: Stocks to Buy and Avoid Right Now
After an extended rally on post-Brexit vote market jitters, gold has lost some steam this week with prices slipping to two-week lows yesterday. The yellow metal’s retreat is largely attributable to a rally in U.S. equities following the upbeat June employment report, a surge in global stock markets and reduced political uncertainty in the UK following the appointment of Theresa May as the Prime Minister.
Notwithstanding the pullback, the bull market for gold remains intact with prices of the metal are up roughly 25% year to date.
Will the Bull Market for Gold Continue?
After hitting a fresh two-year high earlier last week, gold prices closed lower last Friday due to better-than-expected U.S jobs reports for June. The U.S. economy created 287,000 jobs in June (the biggest gain in eight months), trouncing the consensus estimate of 175,000. The impressive employment numbers sparked a rally in U.S. stocks, stripping away some of the allure of safe havens including gold. Yet, gold still managed to wrap up the week with a sixth straight weekly gain.
Gold has been losing some of its shine this week. Prices of the metal slipped to their lowest level since Jul 1 yesterday following the Bank of England’s surprising move to keep its benchmark interest rates unchanged at 0.5%. Investors were expecting a rate cut in the wake of Brexit. Moreover, the quick appointment of Theresa May as the Prime Minister on Wednesday somewhat eased the political uncertainties in Britain. These factors triggered a rally in global equities and tarnished the investment demand for gold, leading to a slide in the metal’s prices.
Gold prices broke above the $1,300 per troy ounce level in June after Britain voted to leave the European Union (EU). The market-jolting move sparked as much as around 8% surge in the metal’s prices to trade at levels last seen in Jul 2014. The Brexit-induced chaos in the global markets spurred investors’ demand for safe havens, triggering a strong rally in gold. Gold prices have been also gaining support from growing expectations that central banks around the world would step up monetary stimulus to avert economic damages from Brexit.
The U.S. Federal Reserve’s dovish stance has been another major factor that has helped gold regain its shine. While the impressive June employment report have raised expectations for a rate hike, concerns about global economic growth and lingering economic and political uncertainties in a post-Brexit world are likely to prompt the Fed to hold off on raising interest rates for now. A delay in raising interest rates elevates demand for gold, which produces no income but relies on price appreciation to attract investors.
Gold’s momentum is not expected to fade anytime soon as intense market uncertainty brought forth by Brexit is likely to continue to drive investors’ appetite for safe-harbor assets. Moreover, with Brexit negotiations are yet to start, there is still a lot of risk in the market that are expected to support the metal’s prices in the coming days. Some analysts feel that gold prices could touch the $1,400 an ounce threshold in the near to medium term given the profound impact of Brexit on the global financial markets and macroeconomic uncertainties.
Gold Stocks to Avoid
Despite the momentum for bullion, there are certain stocks in the gold mining space that have failed to catch the rally and are better to shun right now. For that, we have screened sell-rated gold mining stocks that have either witnessed downward estimate revisions over the past few weeks or are expected to see a decline in earnings for the current year.
Asanko Gold Inc.
Headquartered in Vancouver, Canada, Asanko Gold engages in the exploration, development, and production of gold in Ghana. Asanko Gold currently carries a Zacks Rank #4 (Sell). The Zacks Consensus Estimate for the current fiscal has plunged 100% over the past 60 days.
Gold Resource Corp. (GORO - Free Report)
Colorado-based Gold Resource is focused on production and pursuing development of select, high-grade gold and silver projects that feature low operation costs and produce high returns on capital. Gold Resource currently holds a Zacks Rank #4. Its earnings for the current year are expected to decline 50% year over year.
NovaGold Resources Inc. (NG - Free Report)
Vancouver-based NovaGold is a gold and copper company engaged in the exploration and development of mineral properties in Alaska and Western Canada. The stock currently sports a Zacks Rank #4. Over the past 60 days, the Zacks Consensus Estimate for the current year has widened from a loss of 8 cents per share to a loss of 10 cents.
Look for Potential Winners Instead
As the scenario for bullion remains favorable, we recommend investors to instead scoop up some top-quality gold mining stocks that boast solid growth prospects. Our selection is backed by a good Zacks Rank and positive estimate revisions.
Sandstorm Gold Ltd. (SAND - Free Report)
Vancouver-based Sandstorm Gold concentrates on acquiring gold and other precious metal purchase agreements and royalties from companies that have advanced stage development projects or operating mines.
This Zacks Rank #1 (Strong Buy) stock has expected earnings growth of 150% for the current year. The Zacks Consensus Estimate for the current year has shot up around 233% over the last 60 days.
New Gold, Inc. (NGD - Free Report)
Vancouver-based New Gold is engaged in acquisition, exploration, development and operation of mineral properties and mainly explores for gold, silver and copper deposits.
The stock holds a Zacks Rank #1 and has expected earnings growth of 150% for the current year. Over the past 60 days, the Zacks Consensus Estimate for the current year has gone up from a loss of 1 cent to earnings of 1 cent.
B2Gold Corp. (BTG - Free Report)
Vancouver, Canada-based B2Gold explores and develops mineral properties in Nicaragua, the Philippines, Namibia, Burkina Faso and Chile. The company primarily explores for gold, silver and copper.
The stock holds a Zacks Rank #1 and has expected earnings growth of a staggering 900% for the current year. The Zacks Consensus Estimate for the current year has moved up 25% over the last 60 days.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>