Gold Digger: Bullish gold prices to be ‘well supported’ in coming months as inflation, war persists
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Our Gold Digger column wraps all the news driving ASX stocks with exposure to precious metals.
Gold is still trading comfortably above pre-Ukraine war prices, despite the unwinding of some geopolitical risk premium, says Metals Focus.
Yesterday, prices briefly spiked to $US1,980 – a one month high — as soaring inflation, COVID issues in China, and the Russia-Ukraine drove investors into safe havens.
“Ultimately, we believe that gold prices will remain well supported in the coming months, assisted by prospects that inflationary pressure will last for longer as well as the persistence of geopolitical tensions,” Metals Focus says.
Gold’s recent resilience is notable, because it is happening as both US Treasury yields and the dollar enjoy notable gains.
This typically tend to undermine gold’s appeal to institutional investors, Metals Focus says.
“In addition to elevated inflationary concerns, this also reflects growing fears about a Fed policy mistake, where aggressive hikes bring about an economic slowdown or worse a recession,” it says.
“This is evident by healthy investment inflows into gold in recent weeks, particular for gold ETPs [exchange traded products].
“With ytd gains exceeding 280t, global ETP holdings have now back to levels last seen in November 2020 and are just 2% off their all-time highs.”
Here’s how ASX-listed gold & silver stocks are performing:
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A great week for Aussie producers, many of which made significant double-digit gains.
Beleaguered West African miner Resolute Mining (ASX:RSG) is staging a small recovery after diving 60% over the past 12 months.
It expects gold production at its Syama and Mako mines to increase by around 30,000oz to 345,000oz in 2022.
One of Australia’s biggest miners Regis Resources’ (ASX:RRL) has ridden Russian jitters to a more than 21% gain over the past week.
And surging Red 5 (ASX:RED) remains on track for first gold production at its 2.4Moz, 16-year life-of-mine King of the Hills (KOTH) gold project in WA next quarter.
The $977m market cap stock is up 181% over the past 12 months.