With gold breaking through US$1,600 per oz. – “a key long-term resistance zone” – analysts at Haywood Securities recommend “increasing tactical exposure to gold and gold miners” and “particularly juniors.”
In a research note to clients, the brokerage says the US$1,600 per oz. zone “marks an important inflection point for the commodity … The next major resistance level is in the 1800 zone which, if broken, could give way to new all-time highs in the gold price. We recommend using any short-term retracement/pullback above this new support zone as a result of seasonal weakness to accumulate positions.”
“At US$1,650 per ounce gold, spot price resides well above our US$1,550 per ounce forecast for 2020, and our US$1,475 per oz. long-term projection, as well as virtually all company guidance and project economic study commodity price inputs,” Haywood continues. “In this context, elevated gold price and positive pricing direction would foster heightened leverage for higher cost producers and improved internal rates of return for development stage assets and we expect that market interest is turning more toward such equities holding these asset classes (supported by the GDXJ/GDX ratio).”
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