After three lackluster years, gold has regained its shine in 2016, as reflected by a 23% rise since the beginning of the year. The unprecedented Brexit decision saw gold prices cross the $1,300 per troy ounce threshold in Jun 2016 and prices have remained above that point since.
The Brexit-induced chaos in the global markets spurred investors’ to scurry for safe havens, triggering a strong rally in gold. Moreover, gold prices have been gaining support from expectations that central banks around the world would step up monetary stimulus to avert economic damages from Brexit. The deferral of U.S. interest rate hikes has been another major factor that has aided gold’s cause this year.
Concerns about global economic growth, along with lingering economic and political uncertainties, are likely to act in favor of gold in the near to medium term. Further, gold prices are generally helped by retail demand in countries like India and China, attributable to wedding and festival seasons occurring in the later part of the year. While demand will remain solid, global production of gold is likely to decline by 3% in 2016. This imbalance could facilitate prices moving north.
Newmont’s share price has gone up 113.9% year to date and has also outperformed the S&P 500 by 102.41%.
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