Gold prices dropped to a 10-week low, hitting $1291.65 on Apr 4, owing to rise in dollar. Weekly jobless claims declining to 50-year low, strong manufacturing data and optimism regarding US-China trade negotiations fueled the greenback’s rise.
Per the Labor department, jobless claims in the week ended Mar 30, declined by 10,000 to 202,000 – the lowest level since 1969. This signals that the U.S. labor market continues to build momentum and a reassuring sign for the economy. All eyes are now on the to-be-released employment report for March.
Per the Institute for Supply Management, March PMI stood at 55.3%, indicating growth for the 31st consecutive month for the manufacturing sector. These developments along with optimism regarding a possible trade deal between the United States and China, aided dollar and stocks. The Dow Jones Industrial Average rose 0.64% on Apr 4 while S&P 500 rallied 0.21%. The U.S Dollar Index, which measures the greenback against six trading rivals, closed at 97.30, up 0.2%. Gold usually moves in opposite direction with the dollar. Further, when equities post gains, investors stop buying safe-haven assets such as gold.
Notwithstanding this dip, gold prices have notched a gain 0.8% so far this year and even crossed the psychological level of $1,300 an ounce. Let’s take a look at the factors that are likely to support gold prices this year.
A Dovish Fed: The Fed’s announcement that short-term interest rates will remain unchanged and no hikes expected in 2019, will be conducive for gold prices.
Central Bank's Increasing Appetite for Gold: There has been a noted increase in demand for gold as a reserve asset in 2018, rising 74% compared with 2017. Central banks added 651.5 tons to gold reserves in 2018, the second highest yearly total on record.
India & China Hold Promise: In the last decade, combined demand for gold from India and China has soared 71%. The expanding middle class combined with broader economic growth, will have a significant impact on gold demand. The second half of the year is seasonally stronger in India due to wedding and festive seasons.
Safe-haven Demand: Persistent uncertainty surrounding Brexit timing and its implications will continue to aid gold prices. Gold has long been considered as a safe haven investment in times of financial or political uncertainty.
Industry Positioning, Valuation
Year to date, the Gold Mining industry advanced 6.7% while the S&P 500’s rallied 14.5%. The industry has a trailing 12-month EV/EBITDA multiple of 7.7, lower than the S&P 500’s 11.0.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Mining- Gold Industry, which is a 33-stock group within the broader Zacks Basic Materials Sector, currently carries a Zacks Industry Rank #95, which places it at the top 37% of 256 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Our Picks
Kirkland Lake Gold Ltd. : This Toronto, Canada-based company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings for 2019 has gone up 44% over the past 90 days and projects year-over-year growth of 47%. The company has delivered average positive earnings surprise of 6.45% over the trailing four quarters. Its shares have soared 109% in the past year.
Osisko Gold Royalties Ltd (OR - Free Report) : This Montreal, Canada company carries a Zacks Rank #2 (Buy). The company has delivered average positive earnings surprise of 116.67% over the trailing four quarters. Its shares have gone up 18.4% over the last year.
Sibanye Gold Limited : This Weltevreden Park, South Africa-based company carries a Zacks Rank #2. The Zacks Consensus Estimate for earnings for 2019 is 7 cents per share against a loss per share of 10 cents in 2018. Sibanye Gold has gained 18.6% over the past year.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
Gold prices dropped to a 10-week low, hitting $1291.65 on Apr 4, owing to rise in dollar. Weekly jobless claims declining to 50-year low, strong manufacturing data and optimism regarding US-China trade negotiations fueled the greenback’s rise.
Per the Labor department, jobless claims in the week ended Mar 30, declined by 10,000 to 202,000 – the lowest level since 1969. This signals that the U.S. labor market continues to build momentum and a reassuring sign for the economy. All eyes are now on the to-be-released employment report for March.
Per the Institute for Supply Management, March PMI stood at 55.3%, indicating growth for the 31st consecutive month for the manufacturing sector. These developments along with optimism regarding a possible trade deal between the United States and China, aided dollar and stocks. The Dow Jones Industrial Average rose 0.64% on Apr 4 while S&P 500 rallied 0.21%. The U.S Dollar Index, which measures the greenback against six trading rivals, closed at 97.30, up 0.2%. Gold usually moves in opposite direction with the dollar. Further, when equities post gains, investors stop buying safe-haven assets such as gold.
Notwithstanding this dip, gold prices have notched a gain 0.8% so far this year and even crossed the psychological level of $1,300 an ounce. Let’s take a look at the factors that are likely to support gold prices this year.
A Dovish Fed: The Fed’s announcement that short-term interest rates will remain unchanged and no hikes expected in 2019, will be conducive for gold prices.
Central Bank's Increasing Appetite for Gold: There has been a noted increase in demand for gold as a reserve asset in 2018, rising 74% compared with 2017. Central banks added 651.5 tons to gold reserves in 2018, the second highest yearly total on record.
India & China Hold Promise: In the last decade, combined demand for gold from India and China has soared 71%. The expanding middle class combined with broader economic growth, will have a significant impact on gold demand. The second half of the year is seasonally stronger in India due to wedding and festive seasons.
Safe-haven Demand: Persistent uncertainty surrounding Brexit timing and its implications will continue to aid gold prices. Gold has long been considered as a safe haven investment in times of financial or political uncertainty.
Industry Positioning, Valuation
Year to date, the Gold Mining industry advanced 6.7% while the S&P 500’s rallied 14.5%. The industry has a trailing 12-month EV/EBITDA multiple of 7.7, lower than the S&P 500’s 11.0.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright prospects in the near term. The Zacks Mining- Gold Industry, which is a 33-stock group within the broader Zacks Basic Materials Sector, currently carries a Zacks Industry Rank #95, which places it at the top 37% of 256 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Our Picks
Kirkland Lake Gold Ltd. : This Toronto, Canada-based company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings for 2019 has gone up 44% over the past 90 days and projects year-over-year growth of 47%. The company has delivered average positive earnings surprise of 6.45% over the trailing four quarters. Its shares have soared 109% in the past year.
Osisko Gold Royalties Ltd (OR - Free Report) : This Montreal, Canada company carries a Zacks Rank #2 (Buy). The company has delivered average positive earnings surprise of 116.67% over the trailing four quarters. Its shares have gone up 18.4% over the last year.
Sibanye Gold Limited : This Weltevreden Park, South Africa-based company carries a Zacks Rank #2. The Zacks Consensus Estimate for earnings for 2019 is 7 cents per share against a loss per share of 10 cents in 2018. Sibanye Gold has gained 18.6% over the past year.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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