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Newmont (NYSE:NEM) +3.5% in Wednesday’s trading in a strong session for precious metals miners, as CIBC upgrades shares to Outperform from Neutral with a $61 price target, raised from $46.
CIBC raises its gold price forecast to $2,290/oz in 2024 and $2,600 in 2025, and says its upgrade of Newmont (NEM) reflects the company’s status as the S&P 500’s only listed gold producer.
Given the U.S. macroeconomic outlook, CIBC sees more U.S. investors becoming interested in gold and gravitating to Newmont (NEM) as the largest producer in the space.
Following President Biden’s recent debate performance, “the specter (and spectacle) of a second Trump presidency looms on the horizon and could cause a parabolic shift in the gold price in 2025,” CIBC says.
With rate cuts still looming, and the possibility of a very dovish U.S. president who may test the independence of the Fed, CIBC sees rates falling while inflation remains persistent, fueled by fiscal stimulus and softer rates, which “bodes well for gold,” adding it expects gold ETFs will pick up the pace in late 2024 and into 2025 as rate cuts become a reality.
CIBC says its top picks among precious metals equities are Agnico Eagle Mines (AEM), Kinross Gold (KGC), Pan American Silver (PAAS) and Wheaton Precious Metals (WPM).
Additional Insight:
Gold has long been considered a safe haven asset in times of economic uncertainty, making it an attractive investment option for investors looking to hedge against market volatility. As geopolitical tensions and inflation concerns persist, the demand for gold is expected to remain strong, driving up prices in the coming years.
Potential Impact of Federal Reserve Policies:
The Federal Reserve’s stance on interest rates and monetary policy can have a significant impact on the price of gold. If the Fed continues to pursue a dovish monetary policy and keeps interest rates low, the appeal of non-yielding assets like gold may increase, leading to a rise in prices. Investors should closely monitor Fed decisions and statements for potential shifts in policy that could affect the precious metals market.
