Gold
Bid : 3,084.16/oz
Ask : 3,093.42/oz
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Ask: 36.93/oz
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Refresh in 00:00
Gold
Bid : 3,084.16/oz
Ask : 3,093.42/oz
Silver
Bid : 36.82/oz
Ask: 36.93/oz
Platinum
Bid: 1,369.13/oz
Ask : 1,404.73/oz
Refresh in 00:00

Monsters of Rock: Will the summer be good for gold stocks?

September 20, 2023

Suggestions coming out of the US that rates would likely remain rock-steady at the US Fed meeting this week will encourage the price of gold.

According to the CME’s Fedwatch Tool, the likelihood of a pause at the FOMC meeting this Wednesday is up to 99%, according to Reuters.

The fund rate has increased steadily since March of last year, with the exception of a hiatus in June that came before a 25 bps increase to 5.25–5.5% on July 26.

The Denver Gold Forum, the largest large cap gold meeting of its sort worldwide, is now being held in secret by Australian and North American gold miners. This should be advantageous for them.

Prices increased 0.2% to US$1933/oz overnight, but a falling Australian dollar also assisted in pushing local gold prices beyond $3000/oz, which should leave most local players with around $1000/oz in spot AISC margins, assuming they are not shackled by out-of-the-money hedges.

ANZ’s Adam Boyton said, “Commodities like copper and gold were waiting for signals from the FOMC meeting this week.”

The US Fed’s fund rate may stall, which is good for gold given that sentiment towards the yellow metal is affected by how appealing it is to store cash, but it may also continue to be high for a long time.

“While the Fed is expected to keep rates on hold, strong economic data is raising the prospect of rates remaining high for the foreseeable future,” Boyton wrote in a note today.

Treasury Secretary Janet Yellen said, “The US economy is showing no signs of a looming recession, with the labour market still healthy and industrial output rising.”

“Gold managed to push higher as inflation expectations fell. This should encourage policymakers to hold rates steady at this week’s FOMC meeting.

“The prospect of strong demand from China also buoyed sentiment. The PBoC (People’s Bank of China) lifted temporary curbs on imports that were imposed in a bid to defend the renminbi.”

They lift their arms slowly and eagerly

The most difficult aspect of the game is frequently the waiting, but traders are cautiously optimistic.

All of the big boys were doing well, including Northern Star (ASX:NST), Evolution (ASX:EVN), and Newcrest (ASX:NCM), whose likely American acquisition Newmont received approval from the Australian Foreign Investment Review Board this morning.

Mid-cap stocks saw greater gains since price changes there have a greater impact on cash and earnings.

Silver Lake Resources (ASX:SLR) recovered 3.98% after being crushed yesterday on reports that it had bought an 11% share on the market in Red 5, the owner of the King of the Hills gold mine (ASX:RED), while Ramelius Resources (ASX:RMS) increased by 4.79%.

The stock of the Mark Clark-led Capricorn Metals (ASX:CMM) increased by 3.01%, while other Australian-focused gold miners West African Resources (ASX:WAF), Emerald Resources (ASX:EMR), and Perseus Mining (ASX:PRU) also witnessed interest.

The ASX All Ords gold sub-index increased by 1.26%, bringing its year-to-date return to 15%, as opposed to the ASX Materials sector’s gain of only 1.75%.

Today, the materials industry fell 0.77% as iron ore and battery metals equities lost investor favour.

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