Gold prices trended higher on Monday morning as the unanticipated attack by Hamas on Israel escalated tensions in the Middle East, triggering a rush to safe-haven assets like gold. The rise in bullion prices is expected to boost the prices of gold stocks. Shares of Kinross Gold (NYSE:KGC), Wheaton Precious Metals (NYSE:WPM), Barrick Gold (NYSE:GOLD), Newmont Corporation (NYSE:NEM), and Sibanye Stillwater (NYSE:SBSW) were up 2.8%, 2.1%, 2.3%, 1.7%, and about 4%, respectively, in Monday’s pre-market trading.
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Additionally, U.S. gold futures climbed over 1.1% to $1,865.50 on early Monday, while spot gold moved higher by 1.06% to 1,852.09. The Israel-Hamas war could worsen and boost the demand for safe-haven instruments like the U.S. dollar, Japanese yen, U.S. Treasuries, and gold.
What’s Ahead for Gold Prices?
That said, the Federal Reserve’s hawkish monetary policy might restrict the upside in gold in the near term. High inflation is expected to make the Fed raise interest rates one more time before the end of this year. Higher rates increase the opportunity cost of holding bullion, as it yields no interest.
According to Bloomberg, Priyanka Sachdeva, senior market analyst at Phillip Nova Pte, noted that the crisis in Israel has sparked “panic demand for safe-haven buying in gold.” However, she added that the upward trajectory in the U.S. Treasury yields and the U.S. dollar continues “on the back of the resilience of the US economy and will continue to limit the upside in non-yielding, dollar-denominated bullion.”
Wall Street’s Ratings on Gold Stocks
Given this backdrop, let’s have a look at Wall Street’s ratings for the aforementioned gold stocks using TipRanks’ Stock Comparison Tool.
Among the five stocks mentioned before, Wall Street has a Strong Buy consensus rating for only Barrick Gold, while the other four stocks have a Moderate Buy consensus rating. As per TipRanks’ Smart Score System, Barrick Gold has a “Perfect 10” smart score, implying that the stock could outperform the broader market over the long term.
Meanwhile, analysts see the highest upside potential in Sibanye Stillwater (about 67%) following the significant sell-off in the stock. Year-to-date, shares of Kinross Gold and Wheaton Precious Metals have risen 12.5% and 1.6%, respectively, while shares of Barrick Gold, Newmont Corporation, and Sibanye Stillwater have declined 15.1%, 20%, and 49.3%, respectively.
