Gold and shares of companies that mine the precious metal are expected to hold steady if not advance on the belief that central banks around the world will keep monetary accommodation in place, according to Vertical Research Partners, a Connecticut-based equity research and consulting firm focused on industrials and materials.
“We believe metals in general and gold in particular should continue to gain traction as accommodative policy reversal appears pushed further out and driving continued negative real interest rates,” said Mike Dudas, an analyst with Vertical.
Dudas said that amid fiscal uncertainty and lagging evidence of real economic growth spurting to the upside, US and other central bankers will drive policies that will overshoot economic growth rather than acting too rapidly to withdraw liquidity.
“We do not expect rate hikes to materialize as fast or as quickly as the market anticipates,” Dudas said.
His favored stocks include Coeur Mining (CDE), Freeport-McMoRan (FCX), Goldcorp (GG) and Newmont Mining (NEM). Prices for gold futures have scaled back since reaching a 2017 peak last month, but the ore is still about 9.3% stronger on the year.