Gold Sector's 1Q17 Earnings Preview: What to Expect

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Gold Sector's 1Q17 Earnings Preview: What to Expect PART 1 OF 14

Must Know: Gold Miners’ 1Q17 Expectations

Gold’s run in 1Q17

2017 began on a positive note for gold and gold miners, especially after an unexpectedly bad 4Q16. In fact, November 2016 was the worst month for gold prices since June 2013. In one month alone, gold’s price fell 8%.

Before the election, gold had risen ~20% YTD (year-to-date). The Federal Reserve’s rate hike expectations and President Donald Trump’s election win took most of precious metals’ gains by the end of the year.

Must Know: Gold Miners&#8217; 1Q17 Expectations

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Gold has risen 11.0% YTD as of April 12, 2017. Even though the Fed hiked interest rates in March, gold held onto its gains on the back of dovish comments by the Fed.

In 1Q17, gold prices rallied 8.5%. The broader market (SPY) (SPX) rose 5.5% during the quarter. Uncertainty over President Trump’s tax reforms and investment plans continued. This uncertainty, along with volatility due to the European elections, kept the safe-haven demand for gold strong during 1Q17.

Stock performances

The VanEck Vectors Gold Miners ETF (GDX) rose 9% in 1Q17. There were wide variations among the stock performances of gold miners in 1Q17, mainly due to their varying 4Q16 earnings and 2017 outlooks.

In 1Q17, Barrick Gold (ABX) rose the most at 18.8%. Goldcorp (GG) rose 7.3%, and Kinross Gold (KGC) rose 12.9%. Newmont Mining (NEM) fell 3.3% in the same timeframe.

Series preview

While the above-mentioned companies have diverged significantly in terms of their YTD stock performances, investors may be wondering what course they should take going forward. The 1Q17 results season for gold mining companies is scheduled to start after the market closes on April 24, 2017. Mining companies will provide updates on their projects, productions, and cost guidances.

In this series, we’ll talk about these companies’ earnings expectations and some of the common themes in the gold industry. We’ll also talk briefly about expectations for the gold producers we’ve mentioned above. 

Let’s start with market sentiments and expectations.


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