Gold pushes past $1,200/oz. to its highest price in seven weeks, as the dollar weakened in reaction to Pres.-elect Trump’s first post-election news conference.
Traders were disappointed by the press conference, as it brought little discussion of economic policy plans - “Instead, the press conference was dominated by verbal sabre-rattling, which highlighted the risks of a Trump presidency,” according to metals analysts at Commerzbank.
“Unless the dollar can rally strongly, which I doubt, then gold should continue to grind slowly higher,” says David Govett, head of precious metals at brokerage firm Marex Spectron.
Other analysts warn that gold's 7% bounce since Dec. 15 may be running out of steam because the dollar likely would rebound once Trump moves forward with his economic plans.
Alamos Gold (AGI +12.7%) surges on news it received forestry permits required for the development of its Kirazli gold project from Turkey's government.
AGI, which considers Kirazli its highest return project and a significant source of free cash flow in the years ahead, says the permits are a significant breakthrough for the project.
AGI says feasibility studies to update the economics for both the Kirazli and Agi Dagi projects are nearing completion, and a preliminary economic assessment on the higher grade Camyurt project also is underway.
RBC Capital upgrades gold miners Yamana Gold (AUY +1.7%), Tahoe Resources (TAHO +3.3%) and Alamos Gold (AGI +7.2%) to Outperform from Sector Perform (I, II, III) with respective price targets of $4.50, $19 and $8.50, as the firm sees gold entering a period of seasonal strength.
RBC expects AUY to outperform peers given leverage to gold and attractive valuation, forecasts strong free cash flow for TAHO driven by low-cost silver and gold production from mines in Guatemala, Peru and Canada, and sees AGI benefiting from drill-bit driven value creation at Mulatos and continued operational gains at Young-Davidson.
However, RBC downgrades Gold Fields (GFI +1%) to Sector Perform from Outperform, as a possible M&A overhang, near-term balance sheet pressure and cautious sentiment around South Deep lead it to believe investors will prefer lower-risk investment alternatives.
Analysis from Canaccord Genuity suggests the gold price may have bottomed, thus the firm upgrades Goldcorp (GG -2%), Centerra Gold (OTCPK:CAGDF +0.8%), Detour Gold (OTCPK:DRGDF -1.5%) and Fortuna Silver Mines (FSM -0.4%) to Buy from Hold.
With the recent pullback in commodity prices, "a window of opportunity appears to have presented itself, and we believe investors should consider increasing weights" in select precious metals stocks, the firm says.
Canaccord cites rising market volatility related to the upcoming U.S. election, the recent pullback in extreme non-commercial long gold positions on the Comex, declining selling pressure among hedge funds, and real interest rates remaining near zero whether or not the Fed raises rates in December.
The firm cites other names that could benefit, as underperforming portfolio managers look to increase their leverage to gold, including Kinross Gold (KGC -5.7%), Iamgold (IAG -2.2%) and B2Gold (BTG -3.9%) among senior producers, Endeavour Mining (OTCQX:EDVMF -1.6%) and Alamos Gold (AGI -3%) among mid- and small-cap producers, and Tahoe Resources (TAHO -1.1%) in the silver space.