Today, the price of gold skyrocketed. Combine this with a weaker Aussie dollar and the attractiveness of Australian gold miners is looking more positive for investors.
We saw that as the share price for Australia’s biggest gold company Newcrest Mining Ltd [ASX:NCM] hit a 52-week high of $32.06, up 0.80%.
Newcrest Mining’s share price helped by rate cuts
CBA commodities strategist Vivek Dhar put the recent jump in gold prices down to the ripple effects from the US Federal Reserve:
‘Market expectations of a rate cut increased. And the reason why that’s so important, is that gold competes with your safe haven assets…
‘So whenever you have interest rates being cut, the appeal of a US interest bearing security falls and gold looks more attractive, relatively.’
Usually most investors are reluctant to hold gold, because it has little yield compared to stocks or bonds.
But the rising tensions between the US and China is generating a lot of uncertainty within global markets — it’s what we are seeing when people flock to gold.
It’s a way to minimise risk.
So the rise in gold prices as well as Newcrest Mining’s share price could come as investors look for wealth safe heavens.
Is Newcrest Mining’s share price rise here to stay?
There’s a lot of factors that are at play that could keep supporting gold prices over the next few years.
We are seeing rising demand for one, which is coinciding with falling supply.
That’s positioning companies like Newcrest Mining quite favourably.
More to come.
For Money Morning
PS: Three reasons you should watch gold carefully. Read more about it here in the free report now.