Gold for immediate delivery closed at $1,150.90 per troy ounce on the London Bullion Market (LBM) on Dec. 30, up $13.2 per troy ounce or plus 1.15% from the previous close.
Over the last five trading days of 2016, week 52, gold increased $28.10 per troy ounce or up 2.5%:
Source: Kitco.com
The last series of gold prices on the LBM marked a trend reversal after a terrible November when gold fell by 9.23% or down $120 per troy ounce.
Source: Kitco.com
The Comex was characterized by similar trends over the last two months of 2016. In November gold futures went down $118.8 per ounce, or 9.1% from $1,306.55 per ounce on Nov. 2, to $1,187.75 per ounce on Nov. 30.
Source: Investing.com
During week 52 the Comex increased by 1.5%, from $1,135.30 per ounce on Dec 26 to $1,152.00 per ounce on Dec. 30.
Source: Investing.com
2016 can be divided into two parts: during the first part from January to July-August, gold increased by 26.13% or up $282.75 per troy ounce, from $1,082.25 per troy ounce to $1,365 per troy ounce. During the second part, the bullion market was characterized by a downtrend, from an average price per ounce of $1,341.09 in August to an average price per ounce of $1,151.40 in December.
Source: Kitco.com
Following the trend in the underlying precious metal, the most important gold mining stocks that are traded on the U.S. stock exchanges followed the same pattern, as you can see from the picture below:
Year to date, the gold stock industry increased up to 106% with Barrick Gold Corp. (ABX, Financial) being the leader of the group and Eldorado Gold Corp. (EGO, Financial) +5%, Gold Fields (GFI, Financial) +4% and Goldcorp Inc. (GG) +15% being the laggards in the industry.
The gold stock industry’s 2016 market return can also be divided into two subperiods. During the first seven months of 2016, when gold traded at $1,237 per ounce on average and when it reached its highest point ($1,366.25 per ounce in July), midtier gold producers’ share prices increased at faster rates than those of the biggest gold producers.
Source: GuruFocus.com
Harmony Gold (HMY, Financial) increased 349%, Iamgold (IAG, Financial) 242% and Yamana Gold (AUY, Financial) 204%.
Over the second subperiod, from September to December, following the downtrend in the price of gold, the gold stock industry also fell with the biggest losses reported by AngoGold Ashanti (AU, Financial) -53%, Gold Fields -53%, Yamana Gold -51%, Harmony Gold -54% and Kinross Gold Corp. (KGC, Financial) -40%.
Source: GuruFocus.com
For 2017, several analysts cut their ratings on gold price. They think gold will be significantly affected in the case the three Fed’s rate hikes in 2017 are not accompanied by increasing inflation.
Raymond James downgraded its gold rating to $1,250 per ounce.
Thompson cut its forecast on gold to $1,250 a troy ounce from $1,400 per troy ounce.
Desjardins Capital Markets cut gold price to $1,175 per troy ounce, down from the previous estimate of $1,255 per troy ounce.
BMO Capital Markets decreased its expectations on gold price from $1,413 a troy ounce to $1,175 a troy ounce.
Disclosure: I have no positions in any stock mentioned in this article.
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