Gold’s Price Rise Triggers Mining Stocks’ Rally
$GDX, $SBLG, $GFI, $NEM, $EXCFF
Just about a week ago it looked like Gold’s Y 2017 rally was running out of steam, and in danger of losing sight of the psych mark at 1,200 oz.
A number of major Gold stocks which had outperformed the precious Yellow metal and then some since the beginning of the year, fell back into the Red for Y 2017.
Then the Fed acted on a telegraphed interest rate hike and accompanied the upward adjustment, only the 3rd such move in 10 years, with surprisingly “dovish” comments.
Rate hike expectations for the rest of the year were dampened despite signs that inflation could soon creep above the Fed’s targeted rate at 2.0%. The USD fell as did yields on US government bonds, exactly what Gold’s price needed.
Some Canadian producers are seeing double digit post-Fed gains
Last week Wednesday April Gold futures contracts on the COMEX in New York touched a high of 1,251.50 at the open, up more than 50.00 from marks just before the Fed announcement.
That triggered a huge rally in the shares of the world’s top Gold and Silver producers.
Those counters that received a double benefit from a rising Gold price and strengthening domestic currencies against the USD enjoyed the most gains.
New York-listed equities of South Africa’s Sibanye Gold (NYSE:SBGL), and Gold Fields (NYSE:GFI) are showing gains of over 15% or more while Canadian producers are honing in on double digit post-Fed gains as the precious Yellow metal’s run continues.
Russia’s Polyus Gold is the worst performer and world number 2 producer Newmont (NYSE:NEM) has to settle for an 4.4% advance, but the Denver-based miner is no longer down YTD
- May Silver ended Monday +2% at 18.10 oz,
- April Gold ended Monday +0.6% at 1255.60 oz
The mining ETF (NYSEArca:GDX) is up more than 2% since its bottom last week, a daily cycle low looks to be in.
Gold (NYSEARCA:GLD) and Silver (NYSEARCA:SLV) lag, but as long as 21.14 holds on the mining ETF, there is every possibility that miners will lead the precious metals out of their cycle lows.