Recent comments by U.S. Federal Reserve Chairman Jerome Powell have opened the door for the possibility of a rate cut this summer. Markets have performed well in the first half of 2019, but rising trade tensions and slowing global growth have policy makers anxious.
Unsurprisingly, this dovish turn has the spot price of gold soaring. Gold equities have responded in kind.
Barrick Gold (TSX:ABX)(NYSE:GOLD) is one of the largest gold producers in the world. Shares of Barrick have shot up 11.8% over the past week.
The stock is still down 3.8% in 2019 so far. Its acquisition of Newmont pushed revenue up to $2.09 billion in the first quarter compared to $1.79 billion in the prior year. Barrick exceeded analyst expectations and posted adjusted profit per share of $0.11 in the quarter.
Kinross Gold (TSX:K)(NYSE:KGC) is a Toronto-based senior gold producer. Shares have increased 10% week-over-week as of close on June 5. The stock has climbed 8.4% in 2019 so far.
In the first quarter Kinross achieved gold equivalent production of 606,031 ounces which was in line with its 2019 full year guidance. Adjusted net earnings per share fell to $0.07 over $0.10 in Q1 2018.
A dovish rate path for central banks is a bullish sign for gold going forward. The yellow metal was punished in the spring, but equities look discounted heading into the summer. Gold has wind at its back as we hit the halfway point of 2019.
