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Gold prices surged to their highest level in nearly two weeks as the weakest monthly U.S. jobs growth since Sep 2010 dimmed all hopes of a rate hike in June. Gold is currently at $1,251.75 an ounce.
Rate Hike Deferred
As per the Bureau of Labor Statistics, the U.S. economy created a meager 38,000 jobs in May, far below the consensus estimate of 203,000. Health care was the only sector to show an improvement, mining continued to lose jobs, and employment in information telecommunication decreased due to a strike. Nonfarm payrolls registered its lowest increase since Sep 2010.
The disparaging job report reduced the likelihood of a rate hike this month, which in turn bodes well for gold stocks. Higher rates tend to boost the dollar and make gold less competitive against interest-bearing investments.
Gold on a Roll
Gold has had a good run in 2016, gaining 16% so far. In fact, gold has been the best performing asset, trumping major equity indices, investment grade and high yield bonds and commodity indices. Gold price rose as high as $1,300 per troy ounce on May 2, the peak for the year. The rally in gold prices has been triggered by major volatility in the global equity markets, as concerns loomed large over the health of the global economy, Chinese weakness and its effect on the rest of the world. Other factors that are helping gold prices are a weaker U.S. dollar and Federal Reserve’s cautious policy stance.
In the coming weeks, the Fed’s monetary policy and movement in the greenback will continue to be the main drivers of gold. Further, gold prices will get a boost from retail demand in the second half of the year, which is seasonally strong for countries like India and China. Reports also indicate that the supply of the precious metal has already attained peak levels, a factor that is bound to act as a tailwind. Global production of gold is likely to decline by 3% in 2016, thus ending a 7-year stint of rising output. Lower mined gold supply could drive prices further north.
As the factors leading to gold’s gains remain in place, it would be extremely prudent to add gold stocks to your portfolio now.
Headquartered in Toronto, Canada, Alamos Gold is an intermediate gold producer with diversified production from three operating mines in North America, including the Young-Davidson Mine in northern Ontario, Canada and the Mulatos and El Chanate mines in Sonora, Mexico.
Alamos Gold holds a Zacks Rank #2 (Buy). The stock has gained 14.11% in the past 4 weeks and yielded an impressive return of 126.14% year to date.
Based in Littleton, CO, Vista Gold focuses on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects principally in Australia and North America.
Vista Gold holds a Zacks Rank #2 (Buy). The stock has gained 194.08% year to date and 15.5% in the past 4 weeks.
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4 Gold Stocks to Buy on Soaring Prices
Gold prices surged to their highest level in nearly two weeks as the weakest monthly U.S. jobs growth since Sep 2010 dimmed all hopes of a rate hike in June. Gold is currently at $1,251.75 an ounce.
Rate Hike Deferred
As per the Bureau of Labor Statistics, the U.S. economy created a meager 38,000 jobs in May, far below the consensus estimate of 203,000. Health care was the only sector to show an improvement, mining continued to lose jobs, and employment in information telecommunication decreased due to a strike. Nonfarm payrolls registered its lowest increase since Sep 2010.
The disparaging job report reduced the likelihood of a rate hike this month, which in turn bodes well for gold stocks. Higher rates tend to boost the dollar and make gold less competitive against interest-bearing investments.
Gold on a Roll
Gold has had a good run in 2016, gaining 16% so far. In fact, gold has been the best performing asset, trumping major equity indices, investment grade and high yield bonds and commodity indices. Gold price rose as high as $1,300 per troy ounce on May 2, the peak for the year. The rally in gold prices has been triggered by major volatility in the global equity markets, as concerns loomed large over the health of the global economy, Chinese weakness and its effect on the rest of the world. Other factors that are helping gold prices are a weaker U.S. dollar and Federal Reserve’s cautious policy stance.
In the coming weeks, the Fed’s monetary policy and movement in the greenback will continue to be the main drivers of gold. Further, gold prices will get a boost from retail demand in the second half of the year, which is seasonally strong for countries like India and China. Reports also indicate that the supply of the precious metal has already attained peak levels, a factor that is bound to act as a tailwind. Global production of gold is likely to decline by 3% in 2016, thus ending a 7-year stint of rising output. Lower mined gold supply could drive prices further north.
As the factors leading to gold’s gains remain in place, it would be extremely prudent to add gold stocks to your portfolio now.
Alamos Gold, Inc. (AGI - Free Report)
Headquartered in Toronto, Canada, Alamos Gold is an intermediate gold producer with diversified production from three operating mines in North America, including the Young-Davidson Mine in northern Ontario, Canada and the Mulatos and El Chanate mines in Sonora, Mexico.
Alamos Gold holds a Zacks Rank #2 (Buy). The stock has gained 14.11% in the past 4 weeks and yielded an impressive return of 126.14% year to date.
IAMGOLD Corp. (IAG - Free Report)
Headquartered in Toronto, Canada, IAMGOLD explores, develops and operates mining facilities across North and South America as well as West Africa.
IAMGOLD holds a Zacks Rank #2 (Buy). The stock has gained 166.2% year to date and 11.18% in the past 4 weeks.
Pershing Gold Corp.
Based in Lakewood, Colorado, Pershing Gold engages in the exploration, development, and mining of gold and precious metals primarily in Nevada.
Pershing Gold holds a Zacks Rank #2 (Buy). The stock has gained 23.93% year to date and 10.93% in the past 4 weeks.
Vista Gold Corp. (VGZ - Free Report)
Based in Littleton, CO, Vista Gold focuses on the evaluation, acquisition, exploration and advancement of gold exploration and potential development projects principally in Australia and North America.
Vista Gold holds a Zacks Rank #2 (Buy). The stock has gained 194.08% year to date and 15.5% in the past 4 weeks.
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 >>