The spot prices of gold eased up in early July after storming to a five-year high in June. However, gains for gold equities have been somewhat muted in comparison to prices earlier this decade or in the short bull run in 2016. Investors are anxious ahead of the U.S. Federal Reserve meeting in July. Monetary policy has been the key driver for the yellow metal.
A rate cut could reignite the run for gold in the second half of the year.
Barrick Gold (TSX:ABX)(NYSE:GOLD) is one of the two largest gold producers in the world. The stock has climbed 12.9% in 2019 as of close on July 9.
Shares are up 19.9% from the prior-year. Gold needs to establish a floor at current levels before investors start to re-establish faith in equities like Barrick. If it does, Barrick’s high production will see it churning out nice profits into 2020.
Newmont Goldcorp (TSX:NGT)(NYSE:NEM) is the largest gold producer in the world. Shares have climbed 5.8% over the past month. It currently boasts a price-to-earnings ratio of 29, putting it in not-too-favourable territory for those on the hunt for value. However, when we factor in gold’s rise, Newmont takes on a nice shine.
Gold equity investors will want to keep their eyes fixed on the rate decision that is coming later this month from the U.S. Fed. A move downward should generate positive momentum for gold. Looking long, central banks have grown more dovish which is good news for gold no matter how this most recent decision shakes out.
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