The price of gold is soaring higher on April 17 as the U.S. dollar retreats on news that the Strait of Hormuz has been reopened to shipments of crude oil.
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In afternoon trading, the spot price of gold was up 2% and trading at $4,900 an ounce on hopes for a lasting U.S.-Iran peace deal and end to the war. Gold is on pace to achieve a fourth consecutive weekly gain after falling sharply in late February and early March.
Gold had struggled as investors feared that the Iran war would spark higher inflation and lead to a rise in interest rates. As a non-yielding asset, gold performs better when interest rates are low. But now, investors are piling back into gold on hopes that the worst is over in the Iran war.
The stocks of leading gold producers such as Newmont (NEM), Barrick (B), and Kinross Gold Corp.(KGC) are each up 3% on the day.
Fading Greenback
The price of gold is getting a boost as the U.S. dollar falls to a six-week low and erases all the gains it achieved as a safe haven asset during the war with Iran. Gold is also benefiting as crude oil prices drop sharply, easing fears of higher inflation and rising interest rates.
Futures markets are now pricing in a chance for one 25-basis-point interest rate cut from the U.S. Federal Reserve in December of this year. Despite the current rally, gold’s price remains below its all-time high of just under $5,600 an ounce reached in January.
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.
