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Credit Suisse: 'sentiment around gold and gold equities is positive'

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Investor sentiment toward shares of gold producers appears favorable since the fundamentals for gold prices are positive, plus gold miners themselves appear better positioned than the last time the precious metal was around $1,700 an ounce, said Credit Suisse. A number of analysts and fund managers have told Kitco News that debt is lower and balance sheets stronger than in the last bull cycle for gold, and costs for most producers are well below current prices. Quarterly earnings season is about to kick off in the precious-metals sector. Credit Suiise said there may be limited potential for earnings surprises since roughly half of the companies it follows have already released production figures and temporary mine closures due to the COVID-19 pandemic did not begin until the last two weeks of the first quarter. Analysts look for companies to provide updated guidance, including the impact of the pandemic on capital expenditures and exploration. Mining in some regions, such as Quebec and Argentina, has resumed. “That said, investors we speak to are largely brushing off the near-term COVID-19 operational issues (unless closures extend well into May) and instead are positioning for longer-term gold price upside,” Credit Suisse said. “We find sentiment around gold and gold equities is positive given the macro backdrop for gold, but also the better fundamentals of producers vs. the last time gold was ~US$1,700/oz, as well as cost tailwinds (i.e., energy costs, FX).”

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