Gold stocks have been quite a hot commodity for investors throughout 2020. The pandemic created a large amount of economic uncertainty, which made many investors flock to the gold market. This is because of gold prices rising exponentially. This has been a crazy year full of ups and downs, but for a large section of the year gold was just on an upwards trajectory. This has resulted in many gold stocks increasing in price this year as well. While gold stocks do move based on company performance, they also move on gold prices as well.Treasury News Causes Gold Uptick
On Friday November 20th, gold markets rallied a small bit, as a result of the US dollar selling off. As of writing this, gold’s price is up 0.65%. The US Treasury Secretary was being interviewed on CNBC, explaining why the Trump administration would attempt to prevent an emergency government lending program for citizens. And also, why not to extend it into next year despite there being funding for it. Some believe that President Trump may attempt to make things harder for President Elect Biden, such as what is mentioned above. This has caused some uncertainty among investors regarding the economy in the next few months.
As you know, the economy being down is good for gold stocks. So when news like this comes out that is seemingly negative, gold and precious metal investors are profiting. In regards to this issue, we won’t really know what happens until it does. President Trump has two more months in office in which anything could happen. Biden being inaugurated could bring gold prices up or down as well. It seems like gold investors still believe in the yellow metal, as prices have not dipped below $1,850 this month despite there being other contributing news.The Pandemic And Gold Stocks
Well, obviously the pandemic had a good effect on gold. In 2020, there has been plenty of great gold stocks to watch. Recently news came out from both Pfizer (PFE Stock Report) and Moderna (MRNA Stock Report). Both companies announced they had vaccines around 95% effective in treating patients with COVID-19. This caused a dip in the price of gold and other precious metals. As a result it also affected gold stocks.
Despite the lack of positive price action for gold in November, analysts have high hopes. When vaccines are released, they cannot be instantly widely distributed. Also, if the vaccines are being widely distributed it does not mean the economy can instantly come back. It will take much time to repair the damage that has been done to the economy. This could take years, like the 2008 economic crisis. People still see gold as a good investment going into 2021. The uncertainty in the world has made investors want to stay invested.Where Do Gold Stocks Go From Here?
Factoring everything in stated above, you may be confused which direction gold is moving in. Well, it can be confusing considering the large amount of uncertainty in the market. Some analysts believe the economy will not recover swiftly. This has placed some analyst price targets in the $2,000-$2,300 range. But the truth is, nobody knows the future of gold stocks. That is why it is important to stay up to date on the latest news if you are investing. There is currently three main things that are driving gold prices up and down. These three are rising coronavirus cases and the vaccine, weakening stock market, and unemployment numbers.
If nothing changes in the United States, we are on course to 200,000 cases per day. This is in the near future, with daily cases at 187,000 on November 19th. This could result in more lockdowns and stimulus which could all benefit mining stocks. If President Elect Joe Biden puts stricter COVID-19 restrictions in place, it could help the price of gold. But if cases start to go down, it will hurt the price of gold. People hold gold as a physical asset when the economy is failing, which is why this is the case. It will be interesting to see how gold stocks advance or move in the coming months.