Futures for TSX registered modest gains on Wednesday on higher prices. Investors remain cautious ahead of the Federal Reserve's latest meeting amid growing concerns about a tighter U.S. monetary policy.
Gold prices continue to climb as rising Omicron virus cases supported its safe-haven appeal. Gold is 0.1% higher this morning, as it is trading trading slighlty below the $1,800 level. Other precious metals followed with silver climbing 0.1% higher, platinum - 0.2% and palladium - 1.4% higher.
Historically, gold prices increase during recessions and the latest U.S. Unemployment Claims data was worse than expected. But where will the price of gold go from here?
The price moves for gold were more volatile last year, reaching a point of consolidation in July-September 2021. The recent move lower is simply another test – just like what we saw in June 2020. This means that many gold stocks are currently undervalued and may produce good ROI in the coming months and years.
Canadian gold miner Kinross Gold is a mining stock with a Strong Buy consensus rating from analysts. Kinross Gold reported free cash flows of $182.8 million in Q2 2021, implying an annualized FCF of almost $800 million. It registered a 4.03% asset growth in the trailing twelve months, supported by positive sentiment by bloggers and investors.
Kirkland Lake Gold Ltd. Is another Canadian gold miner with a Strong Buy rating. Despite a 2.7% year-over-year drop in its mining stock, it showed improved earnings in the most recently reported quarter. The company’s quarterly dividend has held steady since the company increased in in December 2020. The company's Q321 production and costs were better than estimated supported by the expected completion of the Macassa shaft project, on track for late 2022.
Franco-Nevada is the third Canadian gold company that analysts recommend holding for the time being. Its operational model is slightly different than the previous two. The royalty and stream company beat earnings estimates during the past eight quarters. Its revenue in Q3 was up 13% year-over-year. Moreover, FNV is debt free, and calls claim to $1.6 billion in available capital.
In the past three months, six analysts have given FNV a Buy rating while two have called it a Hold. With a $157.50 average FNV price target, the upside is 15.5%.