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Buy 5 Gold Miner Stocks on Fed Rate Cut Hopes and Government Shutdown
Buy 5 Gold Miner Stocks on Fed Rate Cut Hopes and Government Shutdown
About this update from Drdgold Ltd.
Gold prices are witnessing a solid northward journey this year, benefiting the stocks associated with yellow metal mining. Gold prices have climbed nearly 51% year to date. On Oct. 7, it touched a new all-time high of $3,976/ounce. In the United States, expectations of more interest rate cuts by the Fed in 2025 increased due to weak labor market conditions. The recent shutdown of the U.S. government resulted in a lack of key economic data. Investors and even the Fed have to depend on private data for information. Under these circumstances, market participants are shifting more toward gold as the yellow metal is known as the “safe-haven” investment.There were several reasons for the surging gold prices. The central banks of many emerging economies are continuously buying the yellow metal. Central banks are bolstering their gold reserves following rising global debt levels, President Donald Trump’s trade and tariff-related uncertainties and lingering geopolitical risks, especially in the Middle East.Moreover, central banks across the world are in the process of cutting interest rates to spur economic growth. A low market interest rate is beneficial for non-income-bearing bullions like gold. The CME Fedwatch interest rate derivative tool currently shows a 96.4% probability of a 25-basis-point rate cut in December.At this stage, it should be prudent to invest in gold mining stocks with a favorable Zacks Rank. Five such stocks are: Agnico Eagle Mines Ltd. AEM, DRDGOLD Ltd. DRD, Alamos Gold Inc. AGI, Gold Fields Ltd. GFI and U.S. Gold Corp. USAU. Each of our picks currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Other PositivesGold is gaining ground on a supply-demand imbalance. The World Gold Council said that the gold mining industry is suffering from a scarcity of deposits of the yellow metal. As gold miners have already explored prospective areas, new mines are very hard to be identified. Gold mining is a very lengthy process by its nature. Moreover, slow-moving government clearances create more hurdles for miners.On the other hand, the use of gold in energy, healthcare and technology is rising. Therefore, an eventual demand-supply imbalance is likely to drive gold prices. Market participants are optimistic about the gold mining industry’s prospects. The chart below shows the price performanc...