KGC - Gold Stocks Are Down But Not Out; Time To Buy?
Are You A Buyer Of Gold At These Leves?
In a wild turn, gold stocks dropped hard on Tuesday. This follows one of the largest 1-day dips for the price of gold in quite some time. Positive sentiment regarding the stock market today helped boost broader sector stocks. This essentially negated the need for a continued flight to safer haven stocks like gold. Yet, just because gold prices are down, that doesn’t mean the gold stock trade is out.
We continue to discuss the overall gold trend and the general trend for gold stocks as well. Given the fact that many companies are starting to come back online, it only makes sense that the price of gold is dictating the general trend of the sector right now. If you remember back in March, gold took a big hit and erased most of the gains for the year. On many accounts, several gold stocks dropped to levels not seen for months. But then we saw a strong rally to new 2020 highs on the heels of economic uncertainty.
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Despite positive sentiment, the economic conditions haven’t changed much since a month or two ago. Many cities are easing quarantine measures, sure. But that doesn’t necessarily equate to a stronger economy. In fact, right now the stock market is outpacing economic growth. So why hasn’t gold completely fallen apart? Simple, the economy is still on shaky ground and this week will see a number of key data readouts.
Will Economic Data Solidify The Gold Stock Trade?
One of the most telling will come Wednesday. This is when the Fed’s beige book is due. This is effectively a summary of economic activity over the past month. We’re also going to get April manufacturing data when durable goods are released on Thursday. April personal income and spending figures are due on Friday. However, most of the focus this week will be on consumer confidence figures. These are due out during the first half of the week. This is followed by Michigan consumer confidence on Friday.
While gold stocks have lost some of their luster, the general trend remains intact. There isn’t likely to be a vaccine “tomorrow”. It’s unlikely that the economy will fully bounce back to a pre-COVID pace in a week. So considering the sentiment could be overly bullish, I believe we are seeing general headline fueled momentum.
On top of that, the U.S./China trade war is heating up. Remember before this year when those headlines were among the top stories fueling volatility? They haven’t gone away and likely won’t before the election.
Are There Gold Stocks To Watch Right Now?
Gold is trading “in a scenario where investors are looking for fresh stimuli to move markets. The risk on approach seen on stocks in the last few days pulled down the price,” said Carlo Alberto De Casa, chief analyst at ActivTrades, in a note.
“Only a clear recovery of $1,750 would open space for further rallies, while a decline below $1,725 would increase the likelihood of another test of $1,700 and potentially down to $1,671-$1,675, where there is a strong static support.”
[Read More] What Are The Best Gold Stocks Today? 4 Names To Know
Of course, the name of the game is finding opportunities. If you believe this is “it” for gold, then you’re likely to ignore precious metals all together. However, if you believe this is just a pause in an overall bull market for gold stocks, then you’ll want to get your list of gold stocks in order.
Gold Stocks To Watch: Great Panther Mining
Among the few gold stocks that are performing on Tuesday, Great Panther Mining (GPL Stock Report) has maintained an overall bullish move. Shares jumped to highs of nearly $0.45 and continued to hold gains above $0.41 for the first half of the market.
The company recently closed a $16.1 million bought deal done at $0.40. Great Panther intends to use the net proceeds of the Offering for near mine and regional exploration programs at the Tucano Gold Mine among other things.
Great Panther President and CEO Rob Henderson stated, “This financing provides additional balance sheet strength to deliver our 2020 objectives and allows us to advance the exploration programs underway at Tucano, where we have 55,000 metres of drilling planned for 2020. We thank all of you who participated in the financing for your ongoing support.”
Gold Stocks To Watch: Barrick Gold
Others haven’t faired as well. But again this could be a time to track some gold stocks to watch amid this latest dip. Barrick Gold stock (GOLD Stock Report), for example, dropped for the 4th day in a row to lows of $24.81. Shares haven’t traded this low since late April.
At that time, Barrick gold stock was having an issue breaking and holding above $25. Eventually, as we now know, Barrick Gold’s stock price managed to climb to highs of $28.50.
Barrick recently settled the majority of the North Mara legacy land claims and has paid the first tranche of the $300 million settlement it agreed with the Tanzanian government to resolve the disputes it inherited from Acacia Mining.
“This is a striking example of what a true partnership can achieve in building a sustainable business capable of creating long-term value for all stakeholders,” said Barrick Management.
Gold Stocks To Watch: Kinross Gold
Kinross Gold stock (KGC Stock Report) reacted similarly to the downturn in gold prices on Tuesday. KGC stock dropped to levels not traded at since the beginning of the month. Earlier in the Tuesday session, Kinross gold stock dipped to lows of $6.65. While it’s still considerably holding gains above major moving averages, selling pressure has been a factor so far this week.
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Kinross gold stock has been greatly influenced by the price of gold recently. Despite progress made, the company has still encountered issues. Last week the company announced that the strike by unionized employees at its Tasiast mine has been suspended at the request of the Government of Mauritania. The recent shutdown, which began on May 5th and ended last week, is not expected to materially affect 2020 production or the development of the 24k expansion.
The company said it has adhered to the three-year “collective labor agreement finalized in Q4 2019, all applicable labor codes, and rigorously complied with all government mandates related to COVID-19 prior to the strike”. It will continue to do so going forward.