Gold shares remained in positive territory Monday afternoon as COMEX gold futures stabilized near $1,780 per ounce.
The Market Vectors Gold Miners ETF (GDX) – which had been up by as much as 1.7% at $54.61 per share this morning – traded higher by 0.7% at $54.08 later in the day. The sector pared its gains in concert with the broader equity markets, as the S&P 500 Index advanced 0.6% to 1,448.80 after earlier rising to 1,457.14.
Two of the world’s largest gold producers – Kinross Gold (K.TSX, NYSE: KGC) and AngloGold Ashanti (AU) – were in the news today, one an encouraging reason and the other not so much.
This morning, Dundee Securities upgraded K.TSX to Buy from Neutral and raised price target to C$13.00 from C$9.50 per share. In the firm’s report, analyst Ron Stewart wrote that “While the market has loved to hate Kinross over the last three years, the Company is a 2.5MM GEO steady state producer that was unquestionably oversold versus its peers. The stock has been showing signs of life recently and we expect this will continue providing management remains committed to capital discipline.”
Shares of K.TSX advanced 1.6% to C$10.22 in Canada on Monday, while KGC rose 1.8% to $10.40 in the U.S.
AngloGold Ashanti (AU) – the largest gold mining company in South Africa – made headlines after it reported that its operations in the country would remain idle due to the workers’ strike that began on September 20th.
CIBC World Markets analyst Leon Esterhuizen wrote in a note to clients that AngloGold “takes a dim view on those employees taking part in the illegal strike and so doing choosing to break their commitment to the current wage agreement and collective bargaining structures.”
Esterhuizen added that “If these issues remain unresolved we could see a large cutback in the SA production base, as the companies cut loss making operations AND scale back life expectancy for these large (supposedly long life) assets. Management is doing what it must, but this may imply a longer drag on share prices and an ultimate loss of reserves/resources.”
Nonetheless, shares of AU shrugged off the negative commentary and remained up by $0.19, or 0.5%, at $35.24 this afternoon. Other notable advancers included GDX components Agnico-Eagle Mines (AEM) and Randgold Resources (GOLD) – which rose by 1.5% to $52.68 and by 2.7% to $126.29 per share, respectively.
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