Gold stocks and the price of gold continued the May climb. Over the last 4 sessions, gold has mounted a strong comeback from last week’s lows. While the trend remains bullish, intermediate declines have been noticed with changes in market sentiment. More economic data came out on Friday helping to push gold stocks higher.
U.S. consumers forced to stay at home helped retail sales fall further. According to reports, this is the biggest drop in retail sales since the data has been collected. When was the previous record set? Last month. Given the gloomy state of the U.S. economy investors continue to pile into the gold trade. Whether that is in physical gold or investing in gold stocks, we can clearly see demand increasing amid recent economic uncertainty.
We also need to remember a few other things. Sentiment will likely shift again as more cities and states reopen economies. It is, no doubt, a positive sign of things getting to some sort of “normal”. But the life after COVID will likely be much different. Companies are already preparing to use technology and facial scanning to identify potential risks of viral spread. What’s the point?
What’s Next For Gold Stocks & ETFs?
We’ll still likely see a much slower economic recovery than some might assume. Restaurants, for example will see much more limited seating. Bars, nightclubs and event spaces still have no timeline of reopening. New York and LA County just extended their stay at home orders into June and July. Considering all of this, there could be tough times ahead in the short to mid-term; at least through the 2020 election in my opinion.
Looking at some of the gold ETFs, the VanEck gold miner (GDX) and junior gold miner gold (GDXJ) ETFs have reached or neared new 2020 highs this month. The former reached a fresh high of $36.24 on May 15. While accumulation has been steady, it has seen a bit of profit-taking over the last month or so in periodic fashion. Overall, however, VanEck Gold Miner ETF has upheld its bullish trend for the year.
Other gold ETFs like Granite Shares Gold Trust ETF (BAR) have also surged since March. For the year, BAR ETF reached highs of $17.41. On Friday, prices hit early highs of $17.39 during premarket trading. The trust stores its gold bullion in London, UK, and undergoes a physical audit of its gold holdings twice per year. As of an audit in November 2019, it held approximately 389,379 ounces of gold in its vault.
Gold Stocks Reach New Highs
When it comes to some of the top gold stocks, Agnico Eagle (AEM Stock Report) stands out right now. Shares of AEM stock reached new 52-week highs on Friday. After hitting $67.68, Agnico Eagle pulled back to an intra-day low of $66.58. However, during the mid-morning, it could present another opportunity to see the gold stock at least retest that high. As of 10:53AM EST shares are back above $67.65. Last time the gold stock traded this high was in late 2011. AEM stock’s all-time high remains at $88.20, which was reached on December 7, 2010.
Newmont gold stock (NEM Stock Report) also hit a fresh high for 2020 on Friday. Shares reached highs of $68.59 during premarket trading and during the normal session hit highs of $68.36. The company recently announced that it will resume its Mexico operations next week. The Mexican government previously mandated a shut-down due to COVID-19.
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