The price of gold finished lower last week as hopes rose on a potential coronavirus vaccine from Gilead (GILD Stock Report). But for most gold stocks, they tended to finish relatively flat. But what optimism is left at the start of the week could tailor off as we get back to reality. A slew of earnings are due that could see sentiment return to uncertainty.
Also, the figures are likely to be secondary to the actual verbiage used in PRs and on earnings calls. Most investors expect results to be bad based on the current state of the economy. But it will be the general outlook of the next 3 quarters that will likely capture investors’ interests.
“Risk sentiment has been bolstered by U.S. President Donald Trump and reports suggesting a potential coronavirus treatment. Market hopes around plans to ease lockdown measures are set to rise, especially after Trump set guidelines that allow social distancing rules to be lifted as soon as four weeks. While gold may sink lower on the good news, the downside will most likely be limited as disappointing economic data across the world drags investors back to reality,” said Lukman Otunuga, senior research analyst at FXTM.
[Read More] Analysts Eye Gold Stocks To Buy & Precious Metals In April
While analysts like Otunuga anticipate a “return back to reality” it hasn’t yet changed market sentiment. But with futures markets set to open, the real test will come as we inch closer to the market open. This coming week, in addition to earnings, we’ve also got key economic data. These including housing and jobless claims, in addition to hopes of economies reopening in some states.
Top Gold Stocks to Watch This Week
But as I said, gold stocks in particular, didn’t waver much in light of the price of gold slumping. Take, Barrick Gold stock (GOLD Stock Report) for instance. While shares pulled back from 52-week highs of $25.11, the stock managed to still close above $24.50 on Friday. Barrick gold stock has enjoyed a solid 4-week rally since breaking down to low of under $13 in mid-March.
Trading volumes have also remained much higher over the last few sessions as gold has become a bright spot in the market. Last week UBS upped its price target on Barrick gold stock to $28 from $28. It also maintained a Buy rating on the stock. This came just one day after Barclays’ analysts downgraded Barrick gold stock to Equal Weight from Overweight. However, the firm boosted its price target from $20 to $25.
Newmont Corporation (NEM Stock Report) also enjoyed a healthy week of trading last week. Similar to Barrick Newmont gold stock reached fresh 52-week highs. at more than double that of Barrick gold stock, Newmont soared to highs of $61.53. Shares also pulled back at the end o the week but managed to close firmly above $59. Newmont hasn’t maintained levels this high since 2011. It’s also interesting to see that shares of Newmont gold stock are now within $11 of striking new all-time highs.
Last week, Tom Parker, CEO of Newmont said the company plans to resume operations at some of its 4 gold mines in Canada and South America where permitted. The company halted operations to comply with government regulations set to curb the spread of COVID-19. Parker said Newmont is looking to carry out a phased resumption of mining activities “in those countries where restrictions have been lifted.”
Gold Penny Stocks Shine Bright
Where many large caps like Barrick and Newmont saw compounded growth in market cap, gold penny stocks may have realized larger percentage gains. IMC International Mining (IMIMF) (CSE:IMCX) reached new all-time highs last week.
The junior gold exploration company saw its shares hit $0.71USD and $0.94CAD on their respective exchanges. This firmly marked a move in the hundreds of percentage points for the gold stock in April.
IMC International Mining (IMIMF) (CSE:IMCX) completed a long-awaited, multi-million dollar acquisition of Thane Mineral and its Cathedral Property. This opened up a major opportunity for the company to stake its claim in a mining region quickly becoming known for significant gold discovery. Shortly thereafter, the company began its geothermal program and has now submitted samples for lab testing.
Yamana Gold Stock (AUY Stock Report) has also responded favorably to the boom in gold prices. Similar to the above stocks, Yamana didn’t pull back with the price of gold. Last week the company announced that it closed its previously announced sale of 12,000,000 common shares of Equinox Gold Corp. and 6,000,000 warrants of Yamana to purchase common shares of Equinox to qualified purchasers for gross proceeds to Yamana of C$120,000,000. The shares and warrants were sold through Stifel GMP and Cormark Securities Inc.
Each warrant entitles the holder thereof to acquire one additional common share of Equinox owned by Yamana at an exercise price of C$13.50 for a term of 9 months expiring on January 15, 2021 . In the event all warrants are exercised, an additional C$81,000,000 will be paid to Yamana, for total gross proceeds to Yamana of C$201,000,000.