Stronger gold prices push TSX futures higher

By CanadianMiningReport.com Staff Writer / January 21, 2022 / Article Link

Futures for Canada's commodity stock index climbed on Monday driven up by firmer gold prices, with trading volumes expected to be subdued due to a U.S. holiday.

The price for spot gold rose 0.2% after two sessions of losses, closing at $1819.7as the U.S. dollar weakened.The rising expectations of monetary policy tightening in the United States were the reason for bullion's gains.

2022 started out with gold registering slight gains on inflation concerns and increased safe-haven demand. Gold prices have been supported by annual inflation rates climbing to multi-decade highs in part driven by the escalating Russia-Ukraine situation.  Reports of of an allegedly impending military conflict saw gold prices increase from $1,806 at the end of December to around $1,820 this week. Gold is famously used as a hedge against inflation and market uncertainties.

At the same time, India and China together account for around 50% of consumer gold demand. Demand in China is projected to remain high as policymakers continue to focus on stimulating domestic consumption. Meanwhile, retail demand in India is strengthening on improved consumer confidence and pent-up demand.

With this in mind, there are several gold stocks to keep an eye on this week:

Gold Fields Limited: the company continues to generate strong cash flows and lower its debt levels. Its owns and operates the South Deep mine, the third-largest gold resource globally. The mine is projected to increase production by 20-30% over the next four years. The company has an estimated long-term earnings growth of 20.4% with current year earnings indicating year-over-year growth of 10%.

Royal Gold has a strong balance sheet. The miner’s focus on reducing debt levels and investing in properties with exploration and production upside. Recently, Royal Gold's board hiked the annual dividend by 17% to $1.40 per share. This is the company’s 21st consecutive annual dividend increase. Its shares have risen 6% over the past three months.

Yamana Gold is on track to continue its expansion and optimization campaign at existing operating mines. It also focuses on development of new mines, advancement of its exploration properties, and looking for other consolidation opportunities in the Americas. Its recent record fourth quarter and 2021 production numbers came after production increased for the eighth consecutive year. As a result, the company’s shares have gained 4.3% over the past three months.

With gold prices anticipated to increase from higher inflation, junior and mid-cap gold producer can benefit from production growth and higher commodity prices.