Record Gold Prices Have Investors Thinking About The Future
August 2020 marked a period of history-making moves in the gold sector. In fact, over the last month, the precious metal saw its value climb by 16.5% or roughly $295 an ounce. At this rate, $2,100 could be just the beginning for the price of gold. We’re in an environment where inflationary tendencies want to come up but simply can’t. Central banks are doing their best job to keep rates low and that’s making for a difficult position in many global currencies.
Global economic concerns haven’t settled either. Even in light of a supposed meeting on August 15th, the markets are still flocking to safe havens. Later this month the U.S. and China are set to meet to discuss China’s compliance with the bilateral trade agreement. Officials are expecting that pressure will be put on China to stick to its promise made previously. The People’s Republic said it would increase imports of American goods over the next two years. However, investors haven’t forgotten that China fell short on fulfilling this promise amid deteriorating discussions regarding Hong Kong.
[Read More] How Much Higher Are Gold Prices Going?
The U.S. President blamed China for the coronavirus. He also aims to pose new restrictions on Chinese tech companies to protect U.S. IP. Additionally, U.S. Secretary of State Pompeo has urged Americans not to use technology products owned by China, including Alibaba, Huawei, Tencent and Baidu.
On the National Stage, House Democrats are expected to agree to a deal on another coronavirus relief package anytime soon. House Speaker Nancy Pelosi was interviewed on Fox News expressing this sentiment. Meanwhile, Senate Majority Leader Chuck Schumer told reporters that relief talks with Republicans are “finally moving in the right direction” and negotiators are “making progress. We came closer together on several issues.”
Are Gold Stocks Benefiting From Historic Gold Prices?
Right now it’s all about bullion; gold bullion that is. Despite the price of forward-month gold futures reaching record highs of $2,081.90 on August 6th, the street price of gold could suggest higher prices potentially around the corner. Right now the 1 oz Gold American Eagle is going for nearly $2,200 and that’s apparently on sale according to APMEX.
Traders closely examined the weekly U.S. jobless claims report. It came in at 1.1 million new claims, which is less than the 1.4 million expected. Thursday’s report is considered somewhat upbeat, amid the thought that the U.S. economic recovery was slowing down. This has some analysts looking at gold ETFs for some additional insight. These have also been surging in popularity recently. SPDR Gold Shares (GLD ETF Report) is the largest fund backed by physical gold in the world. It was the most popular gold ETF in the month of July, pulling in more than $3 billion in assets.
“You also want to pay attention to the mining plays of this,” said Todd Rosenbluth, senior director of ETF and mutual fund research at CFRA Research. “GDX and GDXJ are the gold mining ETFs that are performing quite well. There hasn’t been the same demand, but obviously if the price of gold goes up, that’s a good thing for those that are producing it.”
How Are Gold Stocks Performing?
The interesting scenario on Thursday was that gold stocks pulled back. As the price of gold hit a new record high, a number of top gold stocks retreated. Barrick Gold stock (GOLD Stock Report) dipped back to roughly $29 during Thursday’s morning session. This comes just one day after reaching a new 52-week high of $30.69 on Wednesday.
Newmont Gold stock (NEM Stock Report) also followed suit. In this case, NEM fell below $60.50 just one day after reaching 52-week highs of $72.22. This area around $69.15 to $69.50 was a previous area that Newmont gold stock failed to break above earlier this year in May during the first surge in gold.
AngloGold Ashanti (AU Stock Report) continued its decline. Shares of the gold stock hit 52-week highs at the end of July. Even in light of the recent surge in gold prices, AngloGold stock has dropped for 2 weeks, now. On Thursday, AU stock hit an early afternoon low of $31.17. That’s nearly 20% off of those 52-week highs.
However, gold streaming company Freeport-McMoRan (FCX Stock Report) kept up its bullish trend. The gold stock made another, new 52-week high on Thursday. During the afternoon session, FCX blew past the previous high that it reached on Wednesday. Just after the lunch hour, Freeport stock made a high of $14.61. In its last earnings report, CEO Richard Adkerson said he expects a strong financial position in 2021. Based on that, Adkerson says he expects to reinstate the company’s dividend.
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