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Gold mining stocks up as long term outlook for gold price looks solidly bullish

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Mining stock indexes have risen as traders predict an upward trajectory for the gold price this year. Investor’s Business Daily reported that VanEck Vectors Junior Gold Miners (GDXJ) jumped 7.7% and VanEck Vectors Gold Miners (GDX) added 3.7% on Monday.

EFT Trends reported that ‘Gold miners also jumped, with Market Vectors Gold Miners ETF (NYSEArca: GDX) up 2.0% and Sprott Gold Miners ETF (NYSEArca: SGDM) 2.5% higher on Monday’. The website also reported the triple leveraged Direxion Daily Gold Miners Bull 3X Shares (NYSEArca: NUGT) surged 6.1% and the triple leveraged junior gold miners Direxion Daily Junior Gold Miners Index Bull 3x Shares (NYSEArca: JNUG) jumped 11.6%.

Over two weeks ago we suggested that Brexit and Trump were not a cause for a gold rush but they were cause for a price creep in 2017. Since then markets have seemed to agree. Although there is at least a month’s grace period before the Fed is likely to hike rates, the Economic Times reported that Philadelphia Federal Reserve Bank president, Patrick Harker, suggested he was open to more rate hikes in line with wages and job growth.

Assuming this hike is not sufficient to dampen inflation expectations, wages and job growth, the gold price looks set to have a good year. This is of course dependent on the extent to which rates are hiked – which in turn is dependent on the magnitude of inflation resulting from Trump’s fiscal program.

Despite the possibility of the rate hike, a trend in increased activity in the gold markets isn’t likely to die down soon, as uncertainty surrounding Trump’s suspicion of a strong dollar continues. Naeem Aslam, chief market analyst at ThinkMarkets, echoed this observation, telling Marketwatch that Trump had ‘talked down the dollar, but there is still a lot of uncertainty [regarding] what he will do to drive the dollar lower’.

However, the means by which Trump will achieve his economic goals will impact whether the Fed thinks a tighter monetary policy is an appropriate response, and until then we don’t know whether the bullish trend will continue for certain.

Until March then, the gold price looks healthy. According to Marketwatch, ‘gold futures climbed on Monday extending their gains from last week to lift prices to their highest settlement in nearly three months’. Marketwatch reported on the Dow Jones, which last week saw gold prices rise more than 2% to score their biggest weekly percentage advance since June.

Moreover, the London Bullion Market Association (LBMA)’s 2017 forecast survey suggested that ‘2017 will certainly be an eventful and unpredictable year given the high degree of geopolitical uncertainty, with a more nationalistic US President in residence and the indications that the UK will pursue a hard Brexit in its negotiations with the EU. There is also the prospect of further uncertainty with elections to be held later in 2017 in both France and Germany, as well as the potential for tensions between the US and China. Analysts are predicting that the gold price will trade in an average range of $1,101/oz to $1,379/oz.’

 

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-mining-stocks-up-as-long-term-outlook-for-gold-price-looks-solidly-bullish-12916/

Posted by on Feb 7 2017. Filed under Gold News, Mining. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.

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