Gold prices fell to a four-month low in August because the Federal Reserve signaled an interest-rate hike. However, because the central bank may not raise interest rates anytime soon, and the greenback remains stable, rising investment demand for gold is driving its prices higher. Given this backdrop, we think fundamentally sound gold mining stocks Centerra (CGAU), Torex (TORXF), and Jaguar (JAGGF) could be solid bets now.Gold has relatively little use in industry, which leaves its buying and selling to the whim of investors, which is partly the reason gold is such a widely used hedge against currency fluctuations. This is also the reason yellow metal prices are susceptible to monetary policy changes.
Gold prices had fallen to a four-month low in early August to $1,677.90 per ounce due to a rush to buy U.S. dollars in lieu of gold as the Fed signaled a prospective hike in interest rates. However, spot gold prices rebounded quickly to trade at $1,828.74 per ounce earlier this week, its highest price since September. The rebound can be attributed to the central bank’s intention to not raise the benchmark interest rates anytime soon. Furthermore, analysts expect gold prices to be buoyed by a decline in U.S. Treasury yields after this week’s Producer Price Index showed that wholesale inflation is decelerating.
Given this backdrop, we think fundamentally sound gold mining stocks of Centerra Gold Inc. (CGAU), Torex Gold Resources Inc. (OTC:TORXF), and Jaguar Mining Inc. (OTC:JAGGF) could be solid bets now.