International Gold: Zacks Consensus Estimates Point to Continued Rally
Gold, the traditional safe-haven asset, has been on a tear in recent months, hitting record highs amid global economic uncertainty. The precious metal is expected to continue its upward trajectory, according to Zacks Investment Research’s consensus estimates.
Positive Analyst Sentiment
Analysts covering international gold companies are overwhelmingly bullish on the sector. The Zacks Consensus Estimate for earnings per share (EPS) for the industry in 2023 is $4.13, a significant 30% increase from the $3.21 EPS reported in 2022. The consensus EPS estimate for 2024 is even higher, at $4.75, representing a further growth of 15%.
Factors Driving Growth
Several factors are contributing to the bullish sentiment towards international gold. These include:
* Economic Uncertainty: The ongoing war in Ukraine, rising inflation, and fears of a global recession have all increased demand for gold as a safe store of value.
* Dollar Weakness: The US dollar has weakened in recent months, which makes gold more attractive to investors outside the United States.
* Rising Gold Demand: Gold demand has been strong from both retail investors and central banks, which are adding to their gold reserves.
Company Performance
Major international gold companies are reporting strong financial results, further supporting the Zacks Consensus Estimates. For example, Barrick Gold Corporation (NYSE: GOLD) recently reported record quarterly revenue and earnings, driven by higher gold prices and increased production.
Risks to Consider
While the outlook for international gold is positive, there are some risks to consider. These include:
* Interest Rate Hikes: Rising interest rates could reduce the appeal of gold as an investment, as investors can earn higher returns on alternative investments.
* Economic Recovery: If the global economy recovers quickly from the current slowdown, demand for gold as a safe haven could diminish.
* Currency Fluctuations: Changes in currency exchange rates can impact the value of international gold investments.
Conclusion
The Zacks Consensus Estimates for international gold companies point to a continued rally in the precious metal. Positive analyst sentiment, economic uncertainty, and strong company performance support the bullish outlook. However, investors should be aware of potential risks and consider them when making investment decisions.
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