If you were paying attention to gold stocks on Wednesday, you likely saw several turning around. It may have not been a big breakout like Tesla, but compared to Tuesday’s low, it was a move in the right direction. Gold prices hit 3-week lows recently so Wednesday’s slight turn higher was a welcome sign for bulls.
The Institute for Supply Management said its index of service-oriented companies increased to 6-month highs last month. These include companies like retailers, hospitals and restaurants. Most traders were looking beyond these figures. The expectation right now is for jobs in certain sectors to decline. This could become a direct result of closures due to the coronavirus in Asia.
“While anything is possible in terms of price movement in the short run, I don’t see dip-buying behavior-changing any time soon” for gold, said Michael Armbruster, managing partner at Altavest, in an interview.
Precious metals have competed with other market headwinds as prices marched higher. The stronger dollar and higher bond yields for government bonds didn’t make it a cake-walk for gold, in general. Regardless, the World Health Organization continues to suggest that coronavirus is far from over. That could mean more focus on safe havens amid market uncertainty.
What Are Analysts Saying About Gold Stocks?
Analysts continue to remain bullish on the precious metal. Expectations of a dovish Fed remain in place. In such situations, gold attracts investors for a stronger value proposition compared to low or no yield currencies.
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“Dovishness from the Federal Reserve has also added to gold’s appeal. We reiterate our gold forecast of $1,600 an ounce in 2020,” wrote UBS Global Wealth Management analysts Dominic Schnider and Wayne Gordon, in a Wednesday research note.
However, it wasn’t just gold taking advantage of market momentum on Wednesday. Copper, and platinum both added to gains. Further interest in palladium has also been a recent thing to factor in.
“It would appear as if March Palladium is on a course to make new all-time highs perhaps during the session. Stoking the upward track is the lingering ‘positive spin’ that Chinese support for their economy will help mitigate financial damage.” – Analysts at Zaner Metals
New opportunities For Gold Stock Investors
So, does this mean it’s time to buy gold stocks again? It’s no secret that many precious metal stocks have dipped during recent weeks. However, with gold futures continuing to press on, it’s hard to ignore the potential that another gold price breakout could have.
The last time we saw gold surge was earlier in January when it set new 8-year highs. On top of that, coronavirus concerns persist. However, we can’t forget that with this being an election year, there could be even further choppiness ahead as the election gets closer.