Analysts at TD Cowen are expecting a “strong” third quarter for precious minerals companies, pointing to record-high gold prices and relatively flat cost expectations.
“Q3/24 saw a record-high quarterly gold price of $2,477/oz (Q2/24: $2,338/oz),” they said. “Geopolitical instability in the Middle East, Fed rate cuts, safe haven flows, central bank buying and a weakening U.S. dollar are all contributing to bringing gold to multiple record highs in Q3/24, touching $2,685/oz in late September.
“Physical gold ETF flows flip to net positive in Q3 on the back of a surging gold price. After witnessing net outflows in Q1 and Q2, physical gold ETFs experienced a 3-per-cent net inflow in Q3. Precious metal equity ETF fund flows also turned positive in September, after four months of outflows. This is lining up well to buoy the price of gold, in our view, as physical demand for gold is expected improve on the back of stronger gold consumption in Q4, which is typically the peak season, and as Chinese demand picks up.”
Reaffirming a bullish outlook with the expectation that “the easing cycle will support gold prices, and see geopolitical risk and U.S. election politics as potential tailwinds,” the analysts increased their near- and long-term price deck assumptions. Their 2024 gold projection grew 4.7 per cent to US$2,397 per ounce (from US$2,290), while their long-term estimate jumped 10 per cent to US$2,200 from US$2,000.
With those changes, they raised their targets for stocks in their coverage universe by an average of 13 per cent.
“Our top picks are Agnico-Eagle among the large caps; Alamos and Torex among the mid/ small caps; and MAG among the silvers. Our top picks among the royalties are Wheaton Precious Metals and Royal Gold,” they said.
For large caps, their changes are:
- Agnico Eagle Mines Ltd. (“buy”) to US$105 from US$91. The average is US$89.49.
- Barrick Gold Corp. ( “buy”) to US$27 from US$25. Average: US$24.18.
- Kinross Gold Corp. ( “buy”) to $13 from $11. Average: US$11.07.
- Newmont Corp. ( “hold”) to US$57 from US$48. Average: US$60.35.