The price of gold reached all-time high of over $2,200 per ounce this week, reacting positively to the indications emerging from the latest Federal Open Market Committee (FOMC) meeting in which policymakers reiterated their intentions to cut interest rates three times in the current year.
The precious metal already surged by 6% this month, marking its fourth positive week out of the last five, sparking a revival in gold mining stocks.
In a recent note from Bank of America published this week, analysts reiterated gold remained one of the favored trades for 2024, citing three key drivers: its hedge status against global stocks, central banks' accumulation of gold at record levels and the potential for increased investor participation in ETF purchases.
Bank of America remarked, "More investors could enter the market if yields fall, potentially propelling the gold price to a long-term upside around $2500-$2600."
Read Also: Gold Investors Should Own These ETFs, Says Bank Of America: Why Analysts Expect Gold Spike To $2,600
Despite these bullish trends in gold prices, several mining stocks have trailed behind the commodity and are yet to demonstrate their full upside potential. For instance, the VanEck Gold Miners ETF (NYSE:GDX) is down 3% year-to-date, in contrast to an 8% gain in spot gold prices.
In another note, Bank of America's research analyst Lawson Winder, CFA, highlighted that several gold mining stocks are undervalued compared to the spot market price of gold.
According to Winder, Centerra Gold Inc. (NYSE:CGAU) was priced as if gold were trading at $1,240 per ounce. Other undervalued mining stocks in comparison to the gold price include B2Gold Corp. (NYSE:BTG), Barrick Gold Corp. (NYSE:GOLD) and Newmont Corp. (NYSE:NEM).
"Investors should prioritize gold mining stocks that exhibit a high ratio of upside beta to downside beta, such as Barrick or Newmont," advised Bank of America.
Best Performing Gold Mining Stocks In March 2024
Five gold miners have already rallied more than 30% thus far this month, showcasing a strong sensitivity to commodity price gains.
Name
Price Chg. % (MTD)
Gold Resource Corporation (NYSE:GORO)
54.12%
Austin Gold Corp. (NYSE:AUST)
52.67%
McEwen Mining Inc. (NYSE:MUX)
45.44%
Vista Gold Corp. (NYSE:VGZ)
42.58%
Coeur Mining, Inc. (NYSE:CDE)
33.40%
Read Now: Larry Summers Questions Fed's Eagerness To Cut Rates As Easy Money Policies Clash With High Inflation: 'I Don't Fully Get It'
