Gold price rebounds, Barrick Gold shares set to push higher

Barrick Gold shares rally as gold prices surge

The US-based mining company, Barrick Gold, continues to see its share price soar amid rising gold prices, with the stock up 54% year-to-date.

Barrick Gold saw its shares jump earlier this month after financial filings showed that Warren Buffet-led Berkshire Hathaway had acquired a stake in the business.

The gold miner stands to benefit from the rising cost of the precious metal, with the company reporting a strong set of Q2 earnings in August that showed it was on track to hit its annual production targets for 2020, despite the economic impact of Covid-19.

Second quarter results show year-to-date gold production of 2.4 million ounces, at the mid-point of its 4.6 million to five million ounce annual guidance, driven by strong operating performances, particularly from Nevada Gold Mines (NGM) in the United States, Loulo-Gounkoto in Mali and Kibali in the Democratic Republic of Congo, the company said.

Barrick Gold has also increased its quarterly dividend by 14% to eight cents per share. Its quarterly dividend has more than doubled since the announcement of its merger with Rangold in September 2018.

Barrick Gold is trading at $28.51 per share at the time of publication.

Citigroup analysts think gold could top $2500 an ounce

The value of the US dollar has waned as a result of president Donald Trump’s poor response to the coronavirus pandemic, with the greenback under threat of losing its clout as the world’s reserve currency.

As a consequence, interest in ‘safe haven’ assets like gold is surging, with analysts from Citigroup believing investors could push the previous metal as high as $2500 an ounce.

‘When investors are hungry for gold, the metal has a habit of rising exponentially which has no parallel amongst metals,’ Citigroup analyst Heath Jansen said in a note to investors.

‘On a worst-case scenario for euro sovereign debt and US fiscal problems, we believe gold could repeat the extent of the 1970-1980 gold bull market, implying upside-risk to above $2500 an ounce.’

‘A short-term (but not long lasting) large spike in gold is still possible in our view,’ he added. ‘We would now rate that probability as above 25%, up from below 5% just weeks ago (because of increased sovereign financial issues), and growing.’

Gold price outlook: technical analysis

Gold has managed to rebound sharply yesterday, following a drop towards the 76.4% Fibonacci support level, according to Josh Mahony, senior market analyst at IG.

Given the long-term uptrend in play here, there is a strong chance we are on the cusp of a bullish recovery. Today will see a significant focus on the precious metal sphere, with Powell’s Jackson Hole appearance raising the topic of further easing from the Fed, he said.

‘From a trading perspective, gold needs to break from the pullback we have seen over the past week,’ Mahony said. ‘That would require a break through the $1962 level, which would signal the potential beginning of another bullish phase to bring the wider trend in play.’

‘Until that break occurs, there is still a chance we could see gold turn lower to continue the recent weakness,’ he added.