Gold hit a new record high price on Monday as softer US inflation data continued to support expectations that the Federal Reserve will begin cutting interest rates this quarter.
The yellow metal notched a new record high price of $2,265 per ounce before paring its gains to trade up about 1% at $2,260 per ounce mid-afternoon.
The gold price has gained more than 9% in the year to date.
Expectations of lower interest rates are set to continue supporting gold in the near term with increased demand in the longer-term expected to be driven by geopolitical tensions, with central banks and investors alike seeking out gold as a “safe haven” asset.
“However, the asset could see some pressure on demand in jewellery markets due to the high prices,” warned BDSwiss CEO MENA Daniel Takieddine.
“In India, the world’s second-largest consumer of precious metals, demand for gold could decline, weighing on prices,” Takieddine noted. “At the same time, gold prices could see some downside risks over the short term after March’s surge as traders could move to secure their gains.”
The strong gold price presents an opportunity for investors when it comes to precious metals equities, Mark Reichman, Senior Research Analyst Natural Resources at Noble Capital Markets, believes.
“Because the performance of precious metals mining equities has lagged the strength in gold prices, equities could offer greater upside at this point as investors take notice of attractive valuations juxtaposed against a strong gold price,” Reichman said.
“Junior companies remain particularly attractive based on valuation, and we expect industry consolidation to accelerate as senior producers seek to replenish reserves and resources.”
Analysts at Berenberg have also pointed to gold equities as the investment of choice due to the metal’s enduring value as a safe investment haven amid economic uncertainty and geopolitical tensions.
Undervalued junior miners are notable standouts, the analysts believe, stating that some are “clearly mispriced equities.”
"Amidst the current uncertainties, gold equities represent the optimal investment locale, marked by attractive valuations and a clear pathway to share price appreciation," they wrote.
News from the field:
- Awale Resources Ltd (TSX-V:ARIC) last week unveiled blockbuster drill results from its Odienné project in Côte d'Ivoire. A drill hole at the Charger target intercepted 32 meters with 45.7 grams per ton of gold, contained within a 57-meter stretch averaging 26 grams per ton.
- Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) has achieved or beat its production guidance for the 11th year in a row, with the Africa-focused gold miner delivering $292 million in earnings at an all-in cost of $947 per ounce for 2023. Production for the year was 1.1 million ounces.
- Golden Shield Resources (CSE:GSRI, OTCQB:GSRFF) continues to report encouraging signs of gold mineralization from its ongoing drill program at the Pancake Creek target at the Mazoa Hill deposit in Guyana. This has included the uncovering of a 90-meter shear zone, identified in the second of three diamond drill holes.
- Klondike Gold Corp. (TSX-V:KG) said that the gold potential of its Klondike District Property in Yukon, Canada, has been highlighted by the results of a regional bio-leach extractable gold survey carried out last year by Newmont Canada which included its project. Analysis of samples taken during the survey, which returned a percentile ranking out of 100%, from the Klondike property returned the highest gold sample at 100% and five samples were between 90% and 99.99%.
- Lumina Gold Corp (TSX-V:LUM, OTCQB:LMGDF) has tapped Ausenco to lead the feasibility study for its Cangrejos gold-copper project in Ecuador. The study is expected to be concluded in the first half of 2025.
- Soma Gold Corp. (TSX-V:SOMA, OTCQX:SMAGF) has reported promising results from its initial drill program at the La Aurora mine at its Machuca project in central Colombia, with a notable drill intercept returning 8.35 grams per ton of gold over 1 meter. Underground channel sampling also revealed grades as high as 36.64 grams per ton of gold.
- Sonoro Gold Corp (TSX-V:SGO, OTCQB:SMOFF) has raised C$551,421 in the first tranche of its C$1 million private placement which will be used to fund its ongoing development activities at its Cerro Caliche gold project in Sonora, Mexico. The company is advancing the project through additional drilling as it awaits the Mexican government’s federal permitting authority’s approval of its Environmental Impact Statement.
- Steppe Gold Ltd (TSX:STGO, OTCQX:STPGF) continues to progress the expansion of its ATO Gold Mine in Mongolia, drawing down $40.4 million from its financing package. The expansion is advancing according to projected timelines and budgets and commissioning is on track for the first quarter of 2026, at which point the company expects to produce more than 160,000 ounces of gold per year.
- Thor Explorations Ltd (TSX-V:THX, AIM:THX, OTC:THXPF) expects to increase production at its flagship operation at Segilola in Nigeria by at least 10% in 2024 after achieving its target production of 85,000 ounces last year. Gold production in 2023 totalled 84,609 ounces of gold, with 2024 output expected to rise to between 95,000 and 100,000 ounces.
- US Gold Corp (NASDAQ:USAU) continues to advance its CK gold project in Wyoming, with an anticipated permit approval and a finalized feasibility study expected in the first half of 2024. It believes the project should be shovel-ready by the second half of 2024.