The stocks of gold producers such as Kinross Gold Corp. (KGC), Newmont (NEM), and Barrick (B) are each up about 3% on April 22 after U.S. President Donald Trump declared an indefinite ceasefire in Iran.
Claim 55% Off TipRanks
- Unlock hedge fund-level data and powerful investing tools for smarter, sharper decisions
- Discover top-performing stock ideas and upgrade to a portfolio of market leaders with Smart Investor Picks
The ceasefire has allayed concerns that rising energy prices will spark inflation and lead to higher interest rates. Consequently, spot gold’s price is up 1% in afternoon trading and changing hands at just under $4,800.00 per ounce.
Gold has struggled since the U.S. attacked Iran on Feb. 28. The precious metal’s price hit an all-time high of $5,598.30 per ounce on Jan. 29 before being hit by volatility. Now though, gold appears to be recovering after Trump indefinitely extended the ceasefire with Iran and called for more peace talks.
Weaker U.S. Dollar
Stocks and cryptocurrencies are gaining on the ceasefire news, while the U.S. dollar and oil prices have turned lower. Higher crude prices can cause inflation by raising transportation and production costs. That rise in inflation can lead central banks to raise interest rates, which is bad news for gold.
As a non-yielding asset, gold performs best when interest rates are lower. The metal also does better when the U.S. dollar softens. Futures markets are pricing in one possible 25-basis point interest rate cut from the U.S. Federal Reserve in December of this year.
Is B Stock a Buy?
Barrick Mining’s stock has a consensus Strong Buy rating among 15 Wall Street analysts. That rating is based on 12 Buy and three Hold recommendations issued in the last three months. The average B price target of $59.80 implies 38% upside from current levels.
